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Open AccessArticle

Interest Rate Marketization, Financing Constraints and R&D Investments: Evidence from China

1
School of Management, Huazhong University of Science and Technology, Wuhan 430074, China
2
Zuoling Sub-district Office, Wuhan East Lake High-Tech Development Zone, Wuhan 430075, China
*
Author to whom correspondence should be addressed.
Sustainability 2019, 11(8), 2311; https://doi.org/10.3390/su11082311
Received: 20 February 2019 / Revised: 5 April 2019 / Accepted: 10 April 2019 / Published: 17 April 2019
Under the background of the initial completion of Chinese interest rate marketization process, this paper aims to test the actual impact of interest rate marketization on micro-enterprise research and development (R&D) investments financing. Based on the current situation, we put forward the assumption that Chinese enterprises are generally facing financing constraints in R&D investment. The interest rate marketization, which reduced government intervention in fund pricing, helps alleviate financing constraints, especially for non-state-owned enterprises. This paper focuses on the moderating effect of interest rate marketization on financing constraints and R&D investments. The interest rate marketization index is constructed from three indicators: interest rate determination ways, interest rate fluctuation restrictions, and real interest rate level. We use the Euler-equation investment model to test the financing constraints of R&D investment. Based on panel data of listed firms for 2007–2016, we find that R&D investment faces wide financing constraints, and interest rate marketization alleviates financing constraints. More specifically, financing constraints are more significant for non-state-owned firms than for state-owned enterprises, and the deepening marketization of interest rates can effectively alleviate the financing constraints of non-state-owned enterprises. View Full-Text
Keywords: interest rate marketization; research and development investments; financing constraints; listed company interest rate marketization; research and development investments; financing constraints; listed company
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MDPI and ACS Style

Zhao, X.; Wang, Z.; Deng, M. Interest Rate Marketization, Financing Constraints and R&D Investments: Evidence from China. Sustainability 2019, 11, 2311.

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