Research Article
Economic Policy Uncertainty, Financing Constraints and Firm Innovation in China Based on Experimental Analysis
@INPROCEEDINGS{10.4108/eai.18-11-2022.2326907, author={Gong Chen and Huiyue Liu}, title={Economic Policy Uncertainty, Financing Constraints and Firm Innovation in China Based on Experimental Analysis}, proceedings={Proceedings of the 4th International Conference on Economic Management and Model Engineering, ICEMME 2022, November 18-20, 2022, Nanjing, China}, publisher={EAI}, proceedings_a={ICEMME}, year={2023}, month={2}, keywords={epu; financing constraints; firm innovation}, doi={10.4108/eai.18-11-2022.2326907} }- Gong Chen
Huiyue Liu
Year: 2023
Economic Policy Uncertainty, Financing Constraints and Firm Innovation in China Based on Experimental Analysis
ICEMME
EAI
DOI: 10.4108/eai.18-11-2022.2326907
Abstract
China is comprehensively deepening its reform and opening policy and implementing innovation-driven development strategies. It is very important to study economic policy uncertainty (EPU) and firm innovation over the past year of policy’s implementation to learn from experience to help policies reform in future. This paper based on data of China-listed A-shares for 2000 to 2019, through experimental analysis, tests the nonlinear “inverted U” relation between EPU and firm innovation and selects two typical years as boundaries to divide the data into three samples to study the difference in the relation between EPU and firm innovation among three samples at different EPU levels. The selection of boundary years according to the financial crisis in 2008 and multiple reforms in China and the turbulent international environment in 2016. The results show that EPU promotes firm innovation at a low EPU level and inhibits innovation at a high EPU level. The significance of financing constraints is gradually increasing. In addition, the paper proves the nonlinear “inverted U” relation between EPU and firm innovation.