Does accessibility to different sources of financial capital affect competitive advantage and sustained competitive advantages? Evidence from a highly regulated Chinese market

We investigate whether access to different financial capital sources offers competitive advantages in China's highly regulated market. To identify sources and analyze financial capital relationships that affect competitive advantages, we study 6750 firm-year observations from 2000-2009. Firms gain competitive advantages when they can access internal and external financing in equities, bonds and equity-financed capital. Financial industry reforms benefit large private and government-owned firms. Regional institutional developments help to access sources of external financial capital. Implications include the need to mobilize external financial resources for small and private firms and further reform security regulations to ensure fair competition and sustainability.