Cluster commercial credit, financing constraint, and firm innovation

Yiding Han and Ning Fu

Applied Economics Letters, 2023, vol. 30, issue 17, 2435-2438

Abstract: This paper attempts to explain the continuous growth of firm innovation of Chinese enterprises from a new perspective of cluster commercial credit. Using data from the China Industrial Enterprise Database, this paper finds that cluster commercial credit can promote firm innovation by relaxing financing constraints, and this result is very robust and does not vary with the estimated model. The mechanism is further validated by the analysis after dividing the subsample according to ownership structure. This paper shows that although the capital market is not yet developed in China, firms can use cluster commercial credit to obtain financing for innovation.

Date: 2023
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DOI: 10.1080/13504851.2022.2097629

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