Resource misallocation widely exists in developing countries and has caused serious efficiency loss. For a long time, being trapped in the inefficient system of China’s financial market, Chinese firms have not only widespread financing difficulties, but also financial ownership discrimination among firms with different types of ownership. To improve the efficiency of social capital allocation and get rid of the inefficient credit system, after the reform and opening up, the Chinese government has carried out a series of government-led banking reforms. One of the key components is banking deregulation, encouraging the development of joint-stock commercial banks and city commercial banks except the four major state-owned commercial banks. Taking the development of joint-stock commercial banks as the starting point, this paper studies the impact of local financial development brought about by the structural reform of banks on the level of social resource allocation, and discusses whether financial ownership discrimination has been effectively corrected as a result.　　Based on China Annual Survey of Industrial Firms（ASIF） from 2000 to 2006, and city-level financial development data from the website of CBRC（China Banking Regulatory Commission）, this paper uses the proportion of joint-stock commercial banks’ branches as a proxy for banking deregulation and the micro-information of firms to construct the markup dispersion as a proxy for misallocation, to discuss the potential financial " ownership discrimination” through ownership classification, and identify the entry and exit behavior of firms to reflect the market selection effect. By examining the resource allocation effect of bank diversification and its mechanism, this paper can not only supplement the existing research on China’s financial marketization, but also provide a direct evaluation of the effect of China’s financial development and important reference and guidance for the formulation of policies.　　This paper shows that the development of joint-stock commercial banks can correct the misallocation of resources in China, and this corrective effect is mainly reflected in the development of commercial banks, which improves the resource misallocation within private firm group by stimulating the market selection effect. Also, this paper shows that the above conclusions are strengthened in export-oriented industries, regions with lower degree of marketization and more intense financial competition. However, the development of joint-stock commercial banks aggravates the resource misallocation within the state-owned firm group and at the same time fails to significantly reduce the resource misallocation between private firms, state-owned firms and foreign firms. Therefore, it may still be powerless against " ownership discrimination”.　　To sum up, this paper attempts to make marginal contributions from the following three points: First, the existing researches on the impact of banking deregulation or local financial development either focus on local economic growth and export, or on micro-firm growth, or on changes in banks’ internal behaviors, but do not pay attention to its overall effect on resource allocation. The research in this paper is not only an important supplement to the existing literature, but also has more direct reference value for policy formulation from the perspective of resource allocation. Second, this paper not only pays attention to the influence of banking structural reform on resource allocation, but also deeply digs the theoretical mechanism behind the phenomenon, that is, to reduce the overall level of resource misallocation by promoting the optimal allocation of resources within private firm group. Through detailed analyses, this paper further discusses the problem of financial " ownership discrimination”, which is also a useful supplement to the existing financial development, financing constraints and other related literature. Third, from the perspective of resource allocation, we have provided direct empirical evidence for the concern in Ferri（2009） through the proof of the theoretical mechanism. Our research implies that the key to realizing the optimal resource allocation through China’s financial reform lies on the one hand in further deepening the reform of large state-owned commercial banks, and on the other hand in promoting the reform of state-owned firms and realizing the rational distribution of state-owned capital.