Interest Rate Marketization, Financing Constraints and R&D Investments: Evidence from China
AbstractUnder 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.
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Zhao, X.; Wang, Z.; Deng, M. Interest Rate Marketization, Financing Constraints and R&D Investments: Evidence from China. Sustainability 2019, 11, 2311.
Zhao X, Wang Z, Deng M. Interest Rate Marketization, Financing Constraints and R&D Investments: Evidence from China. Sustainability. 2019; 11(8):2311.Chicago/Turabian Style
Zhao, Xinxin; Wang, Zongjun; Deng, Min. 2019. "Interest Rate Marketization, Financing Constraints and R&D Investments: Evidence from China." Sustainability 11, no. 8: 2311.
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