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Patent pledgeability and cross-region capital flows: Evidence from firms' trans-regional Investment in China

Author

Listed:
  • Wang, Kai
  • Wei, Yixuan
  • Zeng, Shuwan

Abstract

This study employs China's patent pledge financing pilot policy as an exogenous shock to investigate its impact on firms' trans-regional investment. Empirical results show that the policy significantly increases firm-level trans-regional investment, driven primarily by reduced financial constraints, improved market values, and enhanced firm risk-taking. Heterogeneity analysis indicates stronger impacts for non-state-owned enterprises, high-patent-value firms, non-tech industries, and firms in regions with higher entrepreneurial activities, better market environments and legal systems. Robustness tests confirm the stability of the findings. The policy also exerts an asymmetric influence on cross-region capital flows, with net flows concentrated among pilot cities. Overall, the study underscores the economic benefits of patent pledgeability and offers insights for promoting cross-region capital flows.

Suggested Citation

  • Wang, Kai & Wei, Yixuan & Zeng, Shuwan, 2026. "Patent pledgeability and cross-region capital flows: Evidence from firms' trans-regional Investment in China," Pacific-Basin Finance Journal, Elsevier, vol. 98(C).
    • Handle: RePEc:eee:pacfin:v:98:y:2026:i:c:s0927538x26001393
    DOI: 10.1016/j.pacfin.2026.103193
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    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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