A Comparative Study Of The Credit Market Alleviating Corporate R&D Financing Constraints

An upgraded version of State Council's opinion on promoting high-quality development of innovation and entrepreneurship(2018)states:"Innovation is the first driving force of development and the fundamental force for building a modern economic system." By the end of 2017,the total number of R&D(abbreviation for research and development)personnel in China has reached over 4.6 million.Annual R&D investment reached over 243.5 billion and the number of R&D projects reached 110 thousand.Nevertheless more than 400 thousand scientific discoveries are made in the year 2017.Innovation has become an important force in promoting economic growth.However,due to information asymmetry,difference in government connection and government subsidies,firms often suffer financing constraints.The bank-based credit system and the superiority of state-owned banks increase the difficulty for firms raising money in the credit market.High-tech enterprises are "new forces to cultivate new technology and provide new supply." Therefore,solving the dilemma faced by high-tech firms in the credit market is an important subject in studying corporate financing constraints.The research on this issue has both theoretical and practical significance.Previous studies focused on the relationship between capital markets and corporate R&D financing constraints,and there is relatively little empirical studies about credit markets.Domestic research on the latter focuses on the impact of banks and policy loans on financing R&D projests and lacks evidence of the relationship between emerging financing channels and R&D behavior of high-tech companies.Based on the dynamic investment model,this paper takes composite factors into consideration.We mainly study financing constraints of high-tech firms.By using the moment estimation method,we testify whether some emerging financing channels can alleviate R&D financing constraints of high-tech enterprises,and further more we analyze on what extent does credit market alleviate financing constraints of high-tech enterprises.The main conclusions of this paper include:First,the R&D expenditure of enterprises is significantly related to internal cash flow,and R&D spending is sensitive to internal cash flow;the two-phase coefficient of cash flow is positive and significant at 1%,further indicating corporate R&D activities in China face financing constraints.Second,the first-phase coefficient of debt financing is significantly positive,and the two variables representing commercial credit and inventory financing are significantly positive,indicating that the credit market can alleviate corporate R&D financing constraints.Third,this paper divide firms into groups by industry catogery and study R&D financing constraints of high-tech enterprises.The regression result shows that R&D expenditure is significantly related to internal cash flow.High-tech enterprises are faced with financing constraints;the debt financing coefficient is significantly negative,indicating that traditional credit financing cannot increase the liquidity of R&D investment of high-tech enterprises.Fourth,compared with non-high-tech firms,R&D investment of high-tech enterprise shows more sensitivity to commercial credit and inventory financing;the two-phase coefficient of commercial credit and inventory financing is significantly positive,indicating that emerging credit financing can significantly ease R&D financing constraints of high-tech enterprises.Last but not the least,this paper introduces the proxy variables of internal and external financing on improved dynamic investment equation.The regression results show that compared with the non-high-tech firms,high-tech enterprises are more dependent on external financing;in terms of high-tech enterprises themselves,R&D expenditure is more sensitive to external financing than its own funds.Through the research on the financing channels of the credit market,on the one hand,the traditional financing methods can not meet the funding needs of high-tech enterprises;on the other hand,through the research and exploration of emerging financing channels,this paper finds that the financing constraints of high-tech enterprises are alleviated.The new approach provides certain ideas and directions for improving the quality of R&D and solving the lack of R&D funds.