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R%D subsidies and R%D expenditure in China: do financing constraints play intervening roles?

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  • Caijiang Zhang
  • Lu Chen

Abstract

In response to the state of R%D and financing in China, we conducted an empirical study using unbalanced panel data of Chinese listed growth enterprises market (GEM) companies from 2010 to 2017, in order to investigate how R%D subsidies affect R%D expenditure. We find that R%D subsidies can crowd in R%D expenditure, and that financing constraints play intervening roles in the relationship between R%D subsidies and R%D expenditure. The study further implies that R%D subsidies can better ease financing constraints and better crowd in R%D expenditure of enterprises located in innovative cities. We also find that, in China, there is room for enhancing the easing effect of R%D subsidies on financing constraints. In line with our estimation results, we suggest that the Chinese Government provide more R%D subsidies, adjust its R%D subsidy strategy, develop science and technology banks, improve the country's capital market, and enact more preferential policies for R%D.

Suggested Citation

  • Caijiang Zhang & Lu Chen, 2019. "R%D subsidies and R%D expenditure in China: do financing constraints play intervening roles?," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 11(2), pages 155-184.
    • Handle: RePEc:ids:ijtlid:v:11:y:2019:i:2:p:155-184
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    Cited by:

    1. Wu, Zhanchi & Fan, Xiangjun & Zhu, Bangzhu & Xia, Jiahui & Zhang, Lin & Wang, Ping, 2022. "Do government subsidies improve innovation investment for new energy firms: A quasi-natural experiment of China's listed companies," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    2. Mohieddine Rahmouni, 2021. "Determinants of capacity utilisation by firms in developing countries: evidence from Tunisia," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 13(3), pages 212-245.

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