The Boundary of Financial Development and Firms’ R&D Investment

Science Research Management ›› 2017, Vol. 38 ›› Issue (5): 38-47.

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The Boundary of Financial Development and Firms’ R&D Investment

Wang Yu¹, Cheng Liwei², Xia Junnuo¹

1. School of Business, Dalian University of Technology, Panjin 124221, Liaoning, China; 
2. School of Economics, Dalian University of Technology, Dalian 116024, Liaoning, China

Received:2014-10-09 Revised:2016-04-06 Online:2017-05-20 Published:2017-05-20

Abstract

Abstract: It’s important to industrial structure upgrading and economics growth in China for promoting the financial capital flowing to firm R&D and technology advancement. First, constructing theoretical model of the boundary effect of financial development on firms’ R&D investment, finds that the financial scale or financial efficiency that exceeds a certain boundary is not conducive to R&D decision or input. Second, using three stage DEA-Malmquist, HECKIT model and threshold panel, empirically finds that (1) double threshold exists in financial scale, lack of financial deepening or overexpansion is conducive to R&D investment. (2) single threshold exists in financial efficiency, the improve of skill progress, pure skill efficiency, scale efficiency and total factor productivity is conducive to R&D investment. (3) the extensive margin is more important for influence of financial development on firms’ R&D investment.

Key words: financial development boundary, R&D investment, HECKIT model, threshold panel

Wang Yu, Cheng Liwei, Xia Junnuo. The Boundary of Financial Development and Firms’ R&D Investment[J]. Science Research Management, 2017, 38(5): 38-47.

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The Boundary of Financial Development and Firms’ R&D Investment

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