IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v66y2024ics1544612324006524.html
   My bibliography  Save this article

Can government guided funds alleviate corporate financing constraints？ Evidence from China

Author

Listed:
  • Chen, Baodong
  • Pan, Qiao
  • Wu, Shuai

Abstract

As an important tool connecting finance and fiscal, government guided funds are expected to be a significant means of alleviating corporate financing constraints. Based on annual data of listed firms on China's GEM from 2009 to 2023, we find that government guided funds can effectively alleviate corporate financing constraints. This is achieved not only through the "certification effect", which significantly reduces the degree of corporate information asymmetry, but also through the "political connection" resource effect, which promotes the relationship between banks and enterprises. The alleviation effect is more significant in the central and western regions, large-scale enterprises, and growing enterprises.

Suggested Citation

  • Chen, Baodong & Pan, Qiao & Wu, Shuai, 2024. "Can government guided funds alleviate corporate financing constraints？ Evidence from China," Finance Research Letters, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:finlet:v:66:y:2024:i:c:s1544612324006524
    DOI: 10.1016/j.frl.2024.105622
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612324006524
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2024.105622?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.

    References listed on IDEAS

    as
    1. Erik Engberg & Patrik Gustavsson Tingvall & Daniel Halvarsson, 2021. "Direct and indirect effects of private- and government-sponsored venture capital," Empirical Economics, Springer, vol. 60(2), pages 701-735, February.
    2. Guo, Xueting & Ma, Weichun & Liu, Xiaotong & Mo, Yan, 2023. "Fund investor cliques and flow sensitivity—evidence from China," Finance Research Letters, Elsevier, vol. 58(PB).
    3. Erika Jáki & Endre Mihály Molnár, 2021. "Venture capital and government involvement from a qualitative systematic literature review perspective," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 71(4), pages 645-663, December.
    4. Massimo Colombo & Douglas Cumming & Silvio Vismara, 2016. "Governmental venture capital for innovative young firms," The Journal of Technology Transfer, Springer, vol. 41(1), pages 10-24, February.
    5. Siying Yang & Shunyu Ma & Jingjing Lu, 2022. "Can government venture capital guidance funds promote urban innovation? Evidence from China," Growth and Change, Wiley Blackwell, vol. 53(2), pages 753-770, June.
    6. Lanahan, Lauren & Feldman, Maryann P., 2015. "Multilevel innovation policy mix: A closer look at state policies that augment the federal SBIR program," Research Policy, Elsevier, vol. 44(7), pages 1387-1402.
    7. Guerini, Massimiliano & Quas, Anita, 2016. "Governmental venture capital in Europe: Screening and certification," Journal of Business Venturing, Elsevier, vol. 31(2), pages 175-195.
    8. Charles J. Hadlock & Joshua R. Pierce, 2010. "New Evidence on Measuring Financial Constraints: Moving Beyond the KZ Index," The Review of Financial Studies, Society for Financial Studies, vol. 23(5), pages 1909-1940.
    9. Quanxi Liang & Jiangshan Liao & Leng Ling, 2022. "Social interactions and mutual fund portfolios: the role of alumni networks in China," China Finance Review International, Emerald Group Publishing Limited, vol. 12(3), pages 433-450, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hao, Panpan & Wang, Yuchen & Fan, Liyan, 2025. "Government-guided fund, social resources, and corporate green innovation," International Review of Financial Analysis, Elsevier, vol. 98(C).
    2. Zhang, Yuan & Li, Ying, 2025. "Enhancing innovation capabilities, digital management, and corporate competitiveness," Finance Research Letters, Elsevier, vol. 73(C).
    3. Zhanhao Zheng & Yuxuan Liu & Fanzhen Kong & Xicang Zhao, 2024. "Optimizing Urban Technological Innovation through GGFs: A Systemic and Spatial Analysis," Sustainability, MDPI, vol. 16(20), pages 1-19, October.
    4. Zhang, Xubo & Zhang, Xinyu & Tu, Yanbin, 2025. "The paradox of government-guided funds: A negative impact on corporate ESG performance?!," Finance Research Letters, Elsevier, vol. 75(C).
    5. Zheng, Zhuoji & Li, Xueqin & Han, Xianfeng & Shi, Daqian & Liu, Juan, 2025. "Better green financial instrument: Government green fund and corporate new energy technology innovation," Energy Economics, Elsevier, vol. 143(C).
    6. Li, Guangyu & Zhang, Jun & Wang, Yiming & Zhao, Zijian, 2024. "Can government-guided funds promote corporate technology innovation? Evidence from the new energy automobile industry," International Review of Economics & Finance, Elsevier, vol. 96(PB).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Peng, Kai & Yu, Fang & Kong, Dongmin & Li, Yang & Geng, Ruihang, 2024. "Do government-guided funds "guide" the transregional mobility of capital? Evidence from cross-city equity investments," Finance Research Letters, Elsevier, vol. 66(C).
    2. Yuejia Zhang, 2018. "Gain or pain? New evidence on mixed syndication between governmental and private venture capital firms in China," Small Business Economics, Springer, vol. 51(4), pages 995-1031, December.
    3. Li, Yuchen & Meng, Jiayin & Zhou, Ruifan & Wang, Ying, 2024. "Does governmental venture capital (GVC) advance green innovation? Big data evidence from China," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 772-788.
    4. Zhang, Yuxin & Zhou, Yaodong, 2025. "The impact of government industrial funds on the innovation of SMEs in China," Journal of Asian Economics, Elsevier, vol. 97(C).
    5. Jeaneth Johansson & Malin Malmström & Joakim Wincent, 2021. "Sustainable Investments in Responsible SMEs: That’s What’s Distinguish Government VCs from Private VCs," JRFM, MDPI, vol. 14(1), pages 1-22, January.
    6. Huang, Xiaoxia & Jiang, Yanchen & Mallick, Sushanta, 2025. "Endorsement and firm financing: Evidence from government venture capital market in China," The British Accounting Review, Elsevier, vol. 57(3).
    7. Li, Shi & Li, Meng & Ma, Leyao & Ding, Jing, 2025. "Do institutional investor cliques prefer supply chain transparency?," Economics Letters, Elsevier, vol. 248(C).
    8. Silva, Sergio Evangelista & Venâncio, Ana & Silva, Joaquim Ramos & Gonçalves, Carlos Alberto, 2020. "Open innovation in science parks: The role of public policies," Technological Forecasting and Social Change, Elsevier, vol. 151(C).
    9. Harrison, Richard T., 2022. "“Pennies from heaven”? Market failure, circuits of capital and policy support for business angels: The case of cross-border angel investment," Journal of Business Venturing Insights, Elsevier, vol. 17(C).
    10. Li, Jiu-Jin & Fung, Hung-Gay & An, Shi, 2024. "Government venture capital funds: Balancing the impact of social and financial goals on startups," China Economic Review, Elsevier, vol. 85(C).
    11. Jianjun Xu & Lijie Yu & Rakesh Gupta, 2020. "Evaluating the Performance of the Government Venture Capital Guiding Fund Using the Intuitionistic Fuzzy Analytic Hierarchy Process," Sustainability, MDPI, vol. 12(17), pages 1-24, August.
    12. Murray, Gordon, 2020. "Ten Meditations on (Public) Venture Capital – Revisited," MPRA Paper 104389, University Library of Munich, Germany.
    13. Joern H. Block & Massimo G. Colombo & Douglas J. Cumming & Silvio Vismara, 2018. "New players in entrepreneurial finance and why they are there," Small Business Economics, Springer, vol. 50(2), pages 239-250, February.
    14. Simon Kleinert & Christine Volkmann & Marc Grünhagen, 2020. "Third-party signals in equity crowdfunding: the role of prior financing," Small Business Economics, Springer, vol. 54(1), pages 341-365, January.
    15. Suchard, Jo-Ann & Humphery-Jenner, Mark & Cao, Xiaping, 2021. "Government ownership and Venture Capital in China," Journal of Banking & Finance, Elsevier, vol. 129(C).
    16. Fabio Bertoni & Massimo G. Colombo & Anita Quas, 2019. "The Role of Governmental Venture Capital in the Venture Capital Ecosystem: An Organizational Ecology Perspective," Entrepreneurship Theory and Practice, , vol. 43(3), pages 611-628, May.
    17. Engberg, Erik & Halvarsson, Daniel & Tingvall, Patrik, 2017. "Direct and Indirect Effects of Private- and Government Sponsored Venture Capital," Ratio Working Papers 288, The Ratio Institute.
    18. Paige Clayton & Maryann Feldman & Benjamin Montmartin, 2024. "Entrepreneurial finance and regional ecosystem emergence," Small Business Economics, Springer, vol. 62(4), pages 1493-1521, April.
    19. Jiamin Zhang & Qian Cecilia Gu, 2024. "Unraveling the puzzling risk–return relationship: Distinctive roles of government involvement in venture capital investment," Strategic Management Journal, Wiley Blackwell, vol. 45(11), pages 2307-2339, November.
    20. Huang, Xinfei & Zhang, Yue & Zong, Zhe, 2025. "Governmental venture capital and investor sentiment: Evidence from Chinese government guidance funds," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 99(C).

    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:finlet:v:66:y:2024:i:c:s1544612324006524. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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/frl .

    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.