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

Authors: Caijiang Zhang; Lu Chen

Addresses: School of Economics and Commerce, South China University of Technology, Wai Huan East Road 382, Guangzhou, Guangdong, China ' School of Economics and Commerce, South China University of Technology, Wai Huan East Road 382, Guangzhou, Guangdong, China

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.

Keywords: R&D subsidies; R&D expenditure; intervening effect; financing constraints; Chinese listed GEM companies.

DOI: 10.1504/IJTLID.2019.099253

International Journal of Technological Learning, Innovation and Development, 2019 Vol.11 No.2, pp.155 - 184

Received: 16 Aug 2018
Accepted: 03 Feb 2019

Published online: 07 Apr 2019 *

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