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Does public policy towards venture capital promote local innovation? Evidence from China's establishment of fund town

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  • Yang, Qing
  • Huang, Ying Sophie
  • Guo, Feng
  • Zhang, Jindan
  • Zhao, Xiaoyang

Abstract

This paper explores how a place-based policy in China, the fund towns, affects local innovation. Using the staggered establishments of fund towns in various Chinese cities, we find that the establishment of fund towns has positive effects on local innovation. The increasing investments by the venture capital firms offered by the establishment of fund towns are the plausible underlying channel through which fund towns promote local innovation. Additional tests reveal there exist a spillover effect, that is, the innovation in nearby cities increase after the establishment of fund towns.

Suggested Citation

  • Yang, Qing & Huang, Ying Sophie & Guo, Feng & Zhang, Jindan & Zhao, Xiaoyang, 2023. "Does public policy towards venture capital promote local innovation? Evidence from China's establishment of fund town," Finance Research Letters, Elsevier, vol. 52(C).
    • Handle: RePEc:eee:finlet:v:52:y:2023:i:c:s1544612322007541
    DOI: 10.1016/j.frl.2022.103578
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    Cited by:

    1. Hu, Xiaohua & Fei, Yulian, 2023. "Does the matching degree between data and human capital affect firm innovation?," Finance Research Letters, Elsevier, vol. 55(PB).

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    More about this item

    Keywords

    Venture capital; Local Innovation; Fund town;
    All these keywords.

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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