Abstract:    Under the background of internationalization and China′s new normal, technological innovation is the core content of the high-quality economic development. Since the reform and opening up, the economic transition in the direction of market-oriented reform has greatly enhanced the level of development of China′s financial market, but the distortions of factors in the financial market are still very prominent. The development of financial market is seriously lagging behind the economic development, the depth and breadth of financial reforms in various regions are also different. To study the technological innovation effect of financial distortion has important theoretical and practical significance for China to deepen financial system reform, implement innovation-driven development strategy and build an innovative country.
   In this paper, the financial distortion index is reconstructed and measured by using provincial panel data from 2005 to 2015. We use multiple fixed-effect models to empirically test the technological innovation effects of financial distortions. After controlling for robust measures such as missing variables, endogenous tests and placebo tests, the findings remain robust and reliable. This research is rooted in China′s financially distorted institutional environment and explores the technological innovation effects of financial distortions. We attempt to enrich existing research from the following aspects. First, it starts from the perspective of technological innovation output, we deeply analyze the inherent logic of financial distortions affecting technological innovation effects, which reveals the regional differences and causes on the basis of actively exploring theories. Second, considering the availability and continuity of data, we use the new method to measure the financial marketization index, and utilize the benchmark method to construct the financial distortion index of various regions in China, which is an extended research of the current literature focusing on the study of "factor distortion". Third, the academic circles generally do not pay attention to the spatial distribution characteristics of technological innovation inhibition effects. In this paper, the spatial autocorrelation-fixed effect model is used to empirically test the financial distortion technology, which is based on the spatial correlation of technological innovation effects. The approach in this paper provides a new perspective for studying the spatial negative effects of technological innovation.
    In theory, the impact mechanism of financial distortion on technological innovation is manifested in the following three aspects. First, financial distortions induce the financial authority to seek rent and undermine technological innovation motives, then distortions cause mismatches in financial resources and constrain technological innovation activities. Financial distortions are misplaced through policies and reduce technological innovation output. Second, there are regional differences in the impact of financial distortions on technological innovation. The reform strategy of China′s gradual advancement has led to different levels of financial development in various regions, and financial distortions have also shown regional differences. The misallocation of financial resources is prominent in areas with higher financial distortions, and the technological innovation is often suppressed. The resource endowment conditions in various regions are different, and the difference in credit fund allocation is mainly due to the difference in endowment. Third, the impact of financial distortions on technological innovation has spillover effects. Technological innovation is a complex system evolution process. It is not only affected by the financial resources of local regions but also by external forces in other regions. The geographically adjacent and spatially related technological innovation entities interact with each other through formal or informal means. The difference in the allocation of financial elements forms a spatial structure in which the distribution of innovation effects is unbalanced, through the cross-regional flow of factors and the mismatch of resources. Financial distortions weaken technological innovation activities through diffusion effects in surrounding areas.
   In conclusion, the main findings of this paper are as follows. (1) Financial distortions have suppressed regional technological innovations, and these suppression effects are sustainable and significant in China. Technological innovation capital, personnel input and technological output are the continuous accumulation process. The suppression effects of financial distortions have a long-term survival. (2) There are regional differences in the suppression effects of financial distortions on technological innovation, with the strongest in the west, the second in the middle, and the weakest in the east. In the process of China′s gradual reform, the level of financial development in every region is different, and the degree of financial distortion is also uneven. As a result, there are differences in the suppression effects of technological innovation in various regions. (3) The impact of financial distortion on technological innovation has spatial spillover effects. The flow of technological innovation capital, technological innovators and financial factors make the regional technological innovation effects not only affected by financial distortions in local regions, but also by technological innovation effects or financial distortions in other regions.
   The above conclusions have important implications for enhancing the technological innovation capabilities of every region in China. First of all, the government should take some measures such as deepening financial system reform, breaking the monopoly position of the state-owned sector, reducing the threshold for entry into the financial market and improving the efficiency of financial resource allocation to dwindle financial distortions and improve the level and quality of technological innovation. Secondly, each region should clarify the protection of property rights according to its own development status, stay away from power rent-seeking, guard against misplaced policies, create a good financial market environment and effectively evade the financial innovation suppression effect of financial distortion. The central and western regions must place financial reforms in a prominent position, establish and improve the financial market system, focus on regulating the development of the financial industry and promote the upgrading of technological innovation industries. Finally, in order to promote the complementarity and sharing of interregional innovation resources, local governments should strengthen the positive links between regions and realize knowledge diffusion. At the same time, the government sectors should promote the benign and orderly competition of financial markets, create a level playing field for innovation entities in different regions and enhance the level of technological innovation in the whole region.

Key words: financial distortion, technological innovation, regional difference, spillover effect