ABSTRACT
We investigate financing constraints for R&D in China. We find that Chinese private firms are financially constrained for R&D, while state-owned enterprises are not. Mature private firms encounter more severe financing constraints for R&D than young private firms. Moreover, the expansion of external financing supply does not relax the financing constraints for R&D faced by private firms.
Highlights
Chinese private firms are financially constrained for R&D, while state owned enterprises are not.
Mature private firms encounter more severe financing constraints for R&D than young private firms.
Expansion of external financing supply does not relax the financing constraints for R&D faced by private firms.
Disclosure statement
No potential conflict of interest was reported by the author.
Notes
1 If the error term follows a firm-specific MA(1) process, instruments dated t-2 are not valid. Therefore, we use only instruments dated t-3 to t-5 if m1 statistics indicate a first-order autocorrelation in the errors.