Open AccessTHE EFFECTS OF PUBLIC R&D SUBSIDIZED LOANS ON FIRMS’ R&D OUTPUTS: EVIDENCE FROM CHINA
Author(s) -
Yuchen Gao,
Si Zhang,
Yimei Hu
Publication year - 2021
Publication title -
journal of business economics and management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.485
H-Index - 37
eISSN - 1611-1699
pISSN - 2029-4433
DOI - 10.3846/jbem.2021.14581
Subject(s) - subsidy , china , loan , business , panel data , product (mathematics) , empirical research , monetary economics , finance , economics , econometrics , market economy , geometry , mathematics , political science , law , philosophy , epistemology
R&D subsidized loans (tiexi daikuan) is an effective market-driven solution to promote firms’ R&D outputs, including patent applications and new product sales, in China. However, empirical examination on the effects of subsidized loans is insufficient. Using a panel data of manufacturing firms of Jiangsu Province from 2010 to 2014, the study investigates the effects of R&D subsidized loans on firms’ R&D outputs in comparison to that of the direct R&D grants. The results show that R&D subsidized loan recipients significantly outperform those who only receive direct grants in terms of new product sales. Meanwhile, subsidized loans inhibit the recipients’ exploratory patent applications and discourage R&D activities with higher risks. This study contributes to R&D subsidy literature and extends the knowledge in the roles of different types of public sponsorships on firms’ innovation.