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Entry of foreign banks, state ownership, and corporate innovation

Leilei Gu, Xiaoran Ni, Yuchao Peng () and Huilin Zhang

Pacific-Basin Finance Journal, 2020, vol. 61, issue C

Abstract: This study analyzes the impact of the entry of foreign banks on corporate innovation in China. Considering a group of A-share listed firms, we find that, compared to privately owned enterprises, the entry of foreign banks can significantly improve the level and quality of patent applications of state-owned enterprises. We further document that the entry of foreign banks can improve the information environment and curtail agency problems in such enterprises. Our evidence indicates that the entry of foreign banks can incentivize corporate innovation in an economy with strong government intervention and weak investor protection.

Keywords: Foreign Bank; State ownership; Corporate innovation; Emerging market (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:61:y:2020:i:c:s0927538x20300597

DOI: 10.1016/j.pacfin.2020.101340

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