The Impact Of Government Subsidies And Financial Development On Enterprise Innovation

The Fifth Plenum of the 18 th Central Committee of the Communist Party of China proposes clearly that “For presist in the Innovation-driven development,we should put the innovation in a center position in the development of China.” Enterprise plays an important role in the innovation,under this background,How to stimulate the enterprise's creativity becomes the priority.Some related papers show that besides inside fund accumulation,outside fund resource become the key to determine the innovation of enterprise.The outside fund resources are state subsidies and external financing.Based on the resources of outside fund,scholars do quite lot research in state subsidies or external financing,but few paper research the infection by the combination of both state subsidies and external financing.In fact,the levels in the development of finance also make the state subsidies contributing to the enterprise innovation different which means the state subsidies and the development of finance has a interactive function on driving enterprises' innovation.To reason for the interactive effection is that the proporation of the state subsidies is low,the funds gap depends on outside finance system mostly,and the levels of finance development determine the outside financing environment.Consider what we mentioned above,this paper combine the state subsidies and the development of finance inspecting the effection on enterprises' innovation.Additional,whether the state subsidies do stimulate the enterprises' innovation still in doubt which also the reason why this paper study in this theme.Firstly,this paper construct the synthetical index to estimate the development of finance by principal component analysis technique,what is more,based on the list enterprises' data in A-share Market,we study in the interactive effection on the influence of enterprises' innovation by the factors of state subsidies and the development of finance in the unbalanced random panel model.The results are follows:(1)Without the cross term,the development of finance has a positive effect on the enterprises' innovation,meanwhile,the state subsidies have a negative effect on the enterprises' innovation.(2)Considering the cross term,the state subsidies also have a negative effection,but the cross term has a positive effection which means the different finance developments have something in the relationship between state subsidies and the enterprises' innovation.In conclusion,with the development of finance,state subsidies enhance the enterprises' innovation effection.At the same time,the same conclusion can be obtained by replacing the R&D investment with the number of patents output,so that the credibility of this study can be strengthened.(3)The state subsidies and the development of finance have a different effect on the enterprises' innovation when it comes to different scale enterprises,larger enterprise promotes more.The innovation of this paper are the follows.(1)In research the state subsidies effect the enterprises' innovation,this paper considers the different developments of finance and testify the difference exist exactly when mostly papers present are not set foot in this field.(2)In research the development of finance effects the enterprises' innovation,scholars focus on the the change of banking struction and the multi-levels capital market,few are focus on the whole development of finance which is focused in this paper.(3)This paper estimate the development of finance by principal component analysis technique which differ from the traditional/singularly finance ratios(deposit/GDP or loan/GDP),enhanceing the credibility of the results.