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Policy inconsistency and regional innovation dynamics in China: Evidence from textual analysis

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Listed:
  • Sun, Yutong
  • Fang, Tong
  • Yin, Libo
  • Li, Ying

Abstract

We construct a new measure of city-level policy inconsistency using textual analysis and examine its impact on regional innovation in China. The results indicate that policy inconsistency significantly reduces regional total patent applications and regional corporate applications, but is positively related to industry-university-research collaborative patent applications. Mechanisms analyses indicate that policy inconsistency exacerbates both regional resource allocation distortion and corporate risk aversion, thereby hindering regional total and corporate innovation activities. Research investment and funding for higher education institutions are not sensitive to policy inconsistency, and higher education institutions serve as a “safe haven” for corporations.

Suggested Citation

  • Sun, Yutong & Fang, Tong & Yin, Libo & Li, Ying, 2025. "Policy inconsistency and regional innovation dynamics in China: Evidence from textual analysis," Finance Research Letters, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:finlet:v:84:y:2025:i:c:s1544612325010062
    DOI: 10.1016/j.frl.2025.107748
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    Keywords

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    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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