Financial Development,Financing Constraints And Enterprise Innovation

With China's economy entering a period of new normal,the traditional extensive growth relying on the quantity of inputs is no longer sustainable,so the economic growth mode is in urgent need of change.Innovation is the key to this transformation,which is also a core strategy for a national's long term development.As enterprises are the main body of innovation activities,the improvement of its innovation ability can not only promote competitiveness themselves,but also drive a national revolution.However,this capability of Chinese enterprises has been lagging behind the actual needs of economic development.According to the "2019 China Top 500 Enterprises Development Report",the average Research & Development(R&D)intensity of China's top 500 companies is only 1.60%,lower than the internationally recognized enterprise survival line which is2%.What factors restrict the innovation input of Chinese enterprises? As Chinese economy finding itself at a crucial stage of transformation,the financial service system is still incomplete,the capital market is immature,and the corporate financing is unstable with high costs and low efficiency.The features of cumulativeness and high adjustment costs in R&D mean that a large amount of long-term financial support is needed.However,the inherent high risks and high information asymmetry of enterprise innovation activities raise the difficulty for their access to external financial support.A good financial system can pool funds,screen innovative projects,allocate resources,supervise managers,help companies overcome moral hazard and adverse selection problems,which helps support and promote innovation.In this context,it is of great significance to study how Chinese financial system supports R&D and better serves the real economy.Based on a series of measures to promote sci-tech finance and the financial reformation in innovation-driven development strategies launched in our country,this article attempts to specifically explore the following topics for helping with R&D financial difficulties: What kinds of influences do financing constraints have on Chinese R&D from a corporate micro perspective? Does this influence differ in heterogeneous enterprises? How does the development of the regional banking sector and the development of the stock market impact the enterprise's innovation input and output,under the lens of macro-financial development and micro-business innovation? Does financial development have dissimilar impacts on enterprises with different ownership,contrasting scales,and incompatible R&D levels?Furthermore,what are the various impacts of financial development in different regions on enterprise's innovation? How does financial development affect R&D through channels? Is there a significant intermediary effect that uses financing constraints as an intermediary variable? What kind of interaction does government subsidies and financial development play on enterprise innovation investment?Ground on the literature review and background study,this paper selects2007-2018 A-share listed companies in the non-financial industry as the research sample for empirical demonstration,the following conclusions are obtained: First,this article uses the SA index,KZ index and WW index method to construct financing constraint indicators to test the impact of financing constraints on corporate innovation.The empirical research shows that financing constraints significantly inhibit the innovation input of listed companies in China,especially for smaller companies and non-state--owned enterprises;financing constraints also have a negative impact on the innovation performance.More specifically,financing constraints have an inhibitory effect on the quantity and quality of innovation outputs.Second,the development of regional banking financial institutions and the development of the stock market in China has significantly promoted corporate innovation investment,especially for non-state-owned enterprises,smaller-scale enterprises,and enterprises with higher levels of R&D;the eastern region reflects this relationship most significantly;in terms of innovation performance,the expansion of regional banking credit scale and regional listed company equity financing have no significant impact on the quantity of enterprise innovation outputs,but it is significantly positively correlated with the quality of enterprise innovation output.Third,this paper studies the mechanism of financial development's influence on corporate innovation.The research finds that financial development can promote R&D by alleviating financing constraints and information asymmetry.The empirical results show that financing constraints have played a significant intermediary effect on financial development affecting corporate innovation.Fourth,regional financial development and government subsidies have a positive interaction effect on R&D.This positive interaction has a more obvious impact on companies with more serious financing constraints and information asymmetry,indicating that government subsidies have played a signaling effect to guide finance development more effectively supporting enterprise innovation.The possible creations of this article are as follows: First,different from a single perspective in most literature,this article combines the corporate micro-financing and the macro-financial development view together,to test the impact of the funds availability on R&D.In the empirical test of the mechanism of financial development on corporate innovation,not only the interaction coefficient test method was used,but also the intermediary effect test method,to deeply explore the relationship between financial development,financing constraints and corporate innovation.Second,from the view of financial functions,this paper innovatively adopts the research perspective of corporate information asymmetry;empirical research finds that financial development can promote R&D by alleviating information asymmetry.Third,in the empirical research,this paper considers both the innovation input and output,and measures the quantity and quality in innovation performance;financial development factor is measured from the perspectives of banking sector,as well as,stock market;enterprises are also sorted by ownership,scale,R&D level and regional differences;these approaches broaden the research depth.At the same time,quantile regression is carried out to make a comprehensive comparison to understand the marginal impact of the banking sector and the stock market on different quantiles of corporate innovation investment.In brief,this article explores the impact of financing constraints and financial development on R&D from a more comprehensive perspective.What's more,this article selects more than two proxy variables for important indicators in robustness testing,which enriches the research methods and empirical conclusions in such topics.Fourth,government subsidies are policy incentives used by the government to ease corporate financing constraints and promote corporate innovation investment.This article puts financial development and government subsidies into the same research framework,explores the interaction of the two on corporate innovation and then puts forward policy suggestions.