Affordable Access

Debt financing and technological innovation: evidence from China

Authors
  • Xin, Kuang
  • Sun, Yuchun
  • Zhang, Ran
  • Liu, Xiao
Publication Date
Jul 01, 2019
Source
VGTU
Language
English
License
Green
External links

Abstract

The availabilities of debt for Chinese firms have been increased since 2008 due to the expansionary monetary policies. These policies triggered concerns over the impact of debt financing on firms’ technological innovation activities. Based on a sample of 225 listed computer and telecommunications equipment firms in China within 2008-2015, this study explored the effect of debt financing on two types of technological innovation, namely radical and incremental innovation. Specifically, both the direct effect of debt financing on technological innovation and its moderating effect on the relationship between R&D intensity and technological innovation were investigated. Results of this study reveal that radical innovation decreases with debt financing at decreasing rates, while incremental innovation is not affected by debt financing itself. In addition, debt financing interacted with R&D intensity exerts positive effect on both radical and incremental innovation. This study adds meaningful insights to the literature on financing technological innovation and builds a bridge connecting macroeconomic policies to firm activities.

Report this publication

Statistics

Seen <100 times