 Does credit market impede innovation? Based on the banking structure analysisFu Xin, Jie Zhang and Wenping Zheng International Review of Economics & Finance, 2017, vol. 52, issue C, 268-288 Abstract: This paper asks whether the credit market impede innovation. Using a province- and industry-level innovation dataset combined with regional loan structure in Chinese credit market during 1999-2007, we identify two measures to proxy Chinese banking structure, the long-term vs. short-term bank loans and the Big-Four vs. non-Big-Four banks, which affect technological innovation. We show that industries that are more dependent on external finance exhibit disproportionally higher level of innovation in provinces with a larger share of the long-term bank loan market. However, a larger share of the short-term bank loan market appears to discourage innovation in industries with more dependence on external finance. Moreover, the positive effect of the long-term bank loans on innovation is strengthened in provinces with a higher level of market share of the non-Big-Four banks, whereas the negative effect of the short-term bank loans on innovation is mitigated in those provinces. This study provides evidence on the positive effect of the credit market on innovation. Keywords: Bank-centered financial system; Loan term structure; Banking structure; Innovation; China (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:52:y:2017:i:c:p:268-288 DOI: 10.1016/j.iref.2017.01.014 Access Statistics for this article International Review of Economics & Finance is currently edited by H. Beladi and C. Chen More articles in International Review of Economics & Finance from Elsevier |
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