Financing R&D in Chinese private firms: Business associations or political connection? |
| |
Institution: | 1. University of Exeter Business School, Streatham Court, Rennes Drive, Exeter EX4 4PU, UK;2. Kedge Business School, 680, cours de la Liberation, 33405 Talence, France;1. China Financial Policy Research Center, School of Finance, Renmin University of China, Beijing, China;2. China Europe International Business School, Shanghai, China;3. China Public Finance Institute, School of Public Economics and Administration, Shanghai University of Finance and Economics, Shanghai, China;1. Jiangxi University of Finance and Economics, Nanchang, 330013, China;2. National Tsing Hua University, Hsinchu, 30013, Taiwan;3. National Taiwan University, Taipei, 10617, Taiwan;1. Institution: Center for Studies of Hong Kong, Macao and Pearl River Delta, Institute of Guangdong, Hong Kong and Macao Development Studies, Sun Yat-sen University;2. Institution: School of Economics, Renmin University of China |
| |
Abstract: | Using a new and unique dataset of Chinese private firms, this paper explores how private firms access bank loans to finance innovative activities. The results reveal that political connection, rather than membership in a government-controlled business association, largely determines private firms' innovations by providing access to bank loans. Furthermore, the “grease-the-wheels” mechanism of political connection is stronger if the firms are more constrained financially, located in regions with low levels of financial development, or located in regions with relatively under-developed institutional environments. Finally, cash flow, used to measure internal financing, and trade credit, used to measure informal financing, are important alternative financing channels and support firms' R&D investments. Our paper implies that China's government needs to continue fostering a good financing environment and supporting innovation activities. |
| |
Keywords: | R&D investment Bank loans Business association Political connection Financial constraints O30 L22 G21 D73 |
本文献已被 ScienceDirect 等数据库收录! |
|