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Credit availability, overinvestment, and corporate innovation capability

Author

Listed:
  • Zhu, Fengzhan
  • Chen, Liang

Abstract

This paper uses panel data from A-share listed companies in China for the period 2011–2022 to explore the impact of credit availability on corporate innovation capability and its underlying mechanisms. The empirical results indicate that ample credit resources significantly enhance corporate innovation capability, with this effect being more pronounced among small and medium-sized enterprises (SMEs) and high-tech enterprises. However, further analysis reveals that overinvestment diminishes the positive impact of credit availability on innovation capability to some extent, suggesting that inefficient allocation of resources may offset the positive effects of credit funding on innovative activities.

Suggested Citation

  • Zhu, Fengzhan & Chen, Liang, 2025. "Credit availability, overinvestment, and corporate innovation capability," Finance Research Letters, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:finlet:v:76:y:2025:i:c:s1544612325002557
    DOI: 10.1016/j.frl.2025.106991
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    More about this item

    Keywords

    Credit availability; Overinvestment; Corporate innovation capability;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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