IDEAS home Printed from https://ideas.repec.org/a/eee/ecmode/v130y2024ics0264999323003711.html
   My bibliography  Save this article

Unraveling the impact of bank loan spread on corporate innovation: Evidence from China

Author

Listed:
  • Shi, Yukun
  • Zhu, Kairan

Abstract

This research explores the innovation dilemmas inherent in large listed companies and state-owned enterprises that are often marred by suboptimal innovation outputs due to a deficiency of intrinsic motivation. It aims to unravel the intricate role of loan spreads as the cardinal influencers of innovation within such entities. Dissecting the nuances of loan spreads the disparity between corporate bank loan rates and the benchmark rate set by the People’s Bank of China reveals that alterations in loan spreads directly influence firms’ inclinations to launch high-risk, high-reward innovative ventures by manipulating investment trajectories through cash flow modifications. The empirical findings corroborate that ascending loan spreads have a stifling effect on innovation, particularly for firms with high debt or financial leverage.

Suggested Citation

  • Shi, Yukun & Zhu, Kairan, 2024. "Unraveling the impact of bank loan spread on corporate innovation: Evidence from China," Economic Modelling, Elsevier, vol. 130(C).
    • Handle: RePEc:eee:ecmode:v:130:y:2024:i:c:s0264999323003711
    DOI: 10.1016/j.econmod.2023.106559
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264999323003711
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econmod.2023.106559?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:130:y:2024:i:c:s0264999323003711. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30411 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.