Political instability, access to private debt, and innovation investment in China

Douglas Cumming, Oliver Rui and Yiping Wu

Emerging Markets Review, 2016, vol. 29, issue C, 68-81

Abstract: We provide evidence from China that access to loans positively affects the probability that a firm will invest in innovation. However, the positive effect of private debt on innovation investment is significantly moderated by political instability. The cost of political instability on innovation is less severe when the entrepreneur has political connections to party leaders. Furthermore, we show that political connections increase the probability that an entrepreneur has access to direct governmental support for innovation investment. These findings are more pronounced for technology intensive industries.

Keywords: Political instability; Private debt; Innovation; China (search for similar items in EconPapers)
JEL-codes: G21 G28 O30 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (43)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:29:y:2016:i:c:p:68-81

DOI: 10.1016/j.ememar.2016.08.013

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