Financial Development and Firm-level Innovation Output——Perspective of Comparing Different Financing Patterns
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| Title | Financial Development and Firm-level Innovation Output——Perspective of Comparing Different Financing Patterns
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| Author | Zhong Teng and Wang Changyun |
| Organization | Renmin University of China |
| Email | zhongteng@ruc.edu.cn；wangchy@ruc.edu.cn |
| Key Words | Financial Development; Innovation Output; Patents; Intellectual Property Protection; Firm Value |
| Abstract | Using provincial financial data and firm-level patent data, we utilize three dimensions of financial development measures: stock market size, banking sector size and banking sector marketization. We find that overall financial development can significantly increase firm’s patent output. Among the three dimensions, the stock market size has a larger impact on innovation than the banking sector variables, especially on the number of invention patents. The mechanism behind the finance-innovation nexus is that financial development can release external financial constraints and increase high-tech firms’ innovation output. Further analysis shows that, in provinces with higher intellectual property protection, financial development has a larger impact on innovation. The policy implication is that direct financing together with proper intellectual property protection helps promote innovation and enhance firm value. |
| Serial Number | WP117 |
| Time | 2016-01-26 |
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