Monetary policy shock and corporate innovation: Evidence from China

Yong Ma and Mengyuan Wang

Economic Systems, 2024, vol. 48, issue 3

Abstract: This paper investigates whether and how monetary policy shock (MPS) affects corporate innovation using a large sample of 3,082 Chinese listed firms over the period 2007–2019. We provide robust evidence that firms increase their innovative activities when faced with MPS. Further analyses show that firms in competitive industries or with less market power are more inclined to increase innovation in the event of MPS, and that the influence of MPS on corporate innovation is more pronounced for firms with more growth opportunities or better financial conditions. We also find that firms tend to increase innovation to a larger extent in expansionary periods than in contractionary ones.

Keywords: monetary policy shock; corporate innovation; China (search for similar items in EconPapers)
JEL-codes: D24 E32 E52 O31 O32 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:48:y:2024:i:3:s0939362524000487

DOI: 10.1016/j.ecosys.2024.101226

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