Abstract: In accordance with the theory of incomplete markets, starting from the unicity and diversity of the financial markets, this paper explores the relationship between the financial market efficiency and the financial structure competitiveness and then offers the concept of competitive financing structure. The competitive financing structure refers to the development of diversified financial system and its corresponding diversified financing channels, including the competitive financing institutions and the competitive financing tools. Therefore, the nature of China’s construction of multi-layer capital markets is to change the situation of the financing channels which were once monopolized by banking system and to establish the competitive diversified financing structure system through the development of the capital markets. The formation and development of China’s regional debt capital markets is the expression form of the development of the competitive financing institutions, while the innovation of financial tools on the basis of the capital markets can enlarge the room of assets income, and finally boost the completeness of China’s financial markets and the improvement of the financial efficiency.

Key words: competitive financing structure; local debt capital markets; incomplete markets; financial efficiency; Pareto improvement