Abstract: Under the background of speeding up the structural reform of the financial supply side, promoting banking competition is one of the important ways to promote the economic development of financial service entities and enhance the efficiency of firm investment. The intention of this paper is to investigate the impact of banking competition on firm investment efficiency, based on data collected manually from the branches of commercial banks and combined with the financial data of Listed Companies in China. It is found that banking competition has significantly increased the level of firm investment, but not had a direct impact on the efficiency of firm investment. On the one hand, although banking competition alleviates the underinvestment of state-owned enterprises by reducing financial constraints and strengthening debt governance, the role of financing may also aggravate the overinvestment of state-owned enterprises, so the investment efficiency of banking competition for state-owned enterprises will depend on the relative degree of underinvestment and overinvestment. On the other hand, banking competition not only restrains excessive investment of non-state-owned enterprises by strengthening the role of debt governance, also alleviates the problem of insufficient investment of non-state-owned enterprises by alleviating financial constraints, which jointly promote the improvement of investment efficiency of non-state-owned enterprises.