Financialization, Monetary Policy and Technological Innovation
Humanities and Social Sciences
Volume 7, Issue 1, January 2019, Pages: 1-13
Received: Nov. 22, 2018; Published: Feb. 1, 2019
Views 191      Downloads 72
Authors
Yang Cai, School of Management Science and Engineering, Central University of Finance and Economics, Beijing, P. R. China
Xiaojing Hao, School of Public Finance and Tax, Central University of Finance and Economics, Beijing, P. R. China
Enhao Han, China Merchants Bank, Shanghai, P. R. China
Ke Gao, Development Research Center of Shandong Provincial People’s Government, Jinan, P. R. China
Article Tools
Follow on us
Abstract
Based on the research hotspot and the established status of the real economy financialization, this paper examines the impact of financialization on regional innovation from a macro perspective. In theory, economic financialization has an impact on regional innovation mainly through innovative “water reservoir effect” and “crowding effect”, and the overall impact depends on the net effect of the two. In view of this, based on the 2008-2016 provincial panel data, this paper analyzes the specific effects of regional financialization on technological innovation and analyzes the transmission path of effects based on the spread of financial regions. The study finds that, on the whole, financialization has a negative overall effect on regional innovation, and this conclusion is still stable after using the instrumental variable test. After considering the spatial factors, the financialization has a positive and spatial relationship between the regions, indicating that the financialization has a tendency to spread between regions; at the same time, the impact of financialization on regional technological innovation is still significantly negative. Considering the location heterogeneity, it is found that the negative effects of financialization are more significant in the central and eastern regions. After further examining the monetary policy, it is found that the relatively loose monetary policy actually strengthens the “crowding out effect” and further worsens the suppression of innovation by financialization. The research of this paper supplements the relevant research on the development and impact of China's financialization at the macro level, and provides important empirical evidence for the government's guiding funds to “deviate from reality”.
Keywords
Regional Financialization, Regional Innovation, Monetary Policy
To cite this article
Yang Cai, Xiaojing Hao, Enhao Han, Ke Gao, Financialization, Monetary Policy and Technological Innovation, Humanities and Social Sciences. Vol. 7, No. 1, 2019, pp. 1-13. doi: 10.11648/j.hss.20190701.11
References
[1]
Song Jun, Lu Wei. The U-shaped Relationship between Non-monetary Financial Assets and Operating Rate of Return——Evidence from Financialization of China's Listed Non-financial Companies [J]. Financial Research, 2015 (6):111-127.
[2]
Xie Jiazhi, Wang Wentao, Jiang Yuan. Manufacturing Finance, Government Control and Technology Innovation [J]. Economics, 2014 (11): 78-88.
[3]
Stockhammer E. Financialisation and the Slowdown of Accumulation [J]. Cambridge Journal of Economics. 2004. 28 (5): 719-741.
[4]
Stockhammer E, Grafl L. Financial Uncertainty and Business Investment [J]. Review of Political Economy, 2010, 22 (4): 551-568.
[5]
Huang Qunhui. On the Development of China's Real Economy in the New Era [J]. China Industrial Economy, 2017 (9): 5-24.
[6]
Tadesse S. Financial Architecture and Economic Performance: International Evidence [J]. Journal of Financial Intermediation, 2002, 11 (4):429-454.
[7]
Freeman R B. It's financialization! [J]. International Labour Review, 2010, 149 (2):163-183.
[8]
Bhaduri A. A Contribution to the Theory of Financial Fragility and Crisis [J]. Cambridge Journal of Economics. 2011. 35 (6): 995-1014.
[9]
Dore R. Financialization of the global economy [J]. Industrial & Corporate Change, 2009, 17 (6):1097-1112.
[10]
González, Ignacio, Sala H. Investment Crowding-Out and Labor Market Effects of Financialization in the US [J]. Scottish Journal of Political Economy, 2014, 61 (5):589-613.
[11]
Zhang Jun, Jin Wei. Re-testing of China's Financial Deepening and Productivity Relationship: 1987-2001 [J]. Economic Research, 2005 (11): 34-45.
[12]
Smith C W, Stulz R M. The Determinants of Firms' Hedging Policies [J]. Journal of Financial & Quantitative Analysis, 1985, 20 (4):391-405.
[13]
Gehringer A. Growth, productivity and capital accumulation: The efforts of financial liberalization in the case of European integration [J]. International Review of Economics & Finance. 2013. 25 (0):291-309.
[14]
Ang J B. Does Foreign Aid Promote Growth? Exploring the Role of Financial Liberalization [J]. Review of Development Economics, 2010, 14 (2):197-212.
[15]
Epstein G. Financialization and the global economy [J]. Nimmo, 2005.
[16]
Orhangazi Ö. Financialisation and capital accumulation in the non-financial corporate sector: A theoretical and empirical investigation on the US economy: 1973–2003 [J]. Mpra Paper, 2008, 32 (6):863-886.
[17]
Kotz, D. M. The Financial and Economic Crisis of 2008: A Systemic Crisis of Neoliberal Capitalism [J]. Review of Radical Political Economics, 2009, 41 (3):305-317.
[18]
Brenner R. What is good for Goldman Sachs is good for America: The origins of the present crisis [J]. Institute for Social Science Research Working Paper Series. 2009.
[19]
He Wei, Xu Longbing. The Path and Influence of Industrial Capital's Infiltration into Financial Capital——Based on the Study of Capital Market "Golding" [J]. Journal of Finance and Economics, 2012, 38 (02):81-90.
[20]
Mccahery J A, Sautner Z. Institutional Investor Preferences and Executive Compensation [J]. Social Science Electronic Publishing, 2012, 2012-004 (1):241-254.
[21]
Getina K K., A Preda. The Oxford Handbook of the Sociology of Finance [M]. 2012. Oxford University Press.
[22]
Frédéric Lordon. Willing Slaves of Capital: Spinoza and Marx on Desire., trans., Gabriel Ash [M]. London: Verso, 2014.
[23]
Zhang Yu, Zhang Chen, Cai Wanhuan. Political Economic Analysis of China's Economic Model [J]. China Social Sciences, 2011 (3): 69-84.
[24]
Chen Shihua, Lu Changchong. Emergency Management and M&A Premium Decision-making among Enterprises——An Empirical Study Based on Inter-Organization Imitation Theory [J]. Management World, 2013 (05):144-156.
[25]
Zhao Qinglu, Kong Xiang, Hou Qingchuan. Monetary Policy, Investment Efficiency of Private Enterprises and Company Option Value [J]. Economic Research, 2012, 47 (05):96-106.
[26]
Ye Kangtao, Zhu Jigao. The austerity of the money and the allocation of credit resources [J]. Management World, 2009 (01):22-28.
[27]
Rao Pingui, Jiang Guohua. Monetary Policy, Credit Resource Allocation and Enterprise Performance [J]. Management World, 2013 (03): 12-22.
[28]
Zhai Xiaosheng. Financing Sources and Smoothing Mechanism of Innovative Investment in Chinese Listed Companies [J]. World Economy, 2013 (4):138-159.
[29]
Wang Hongjian, Cao Yuqiang, Yang Qing, Yang Zheng. The Promotion of Financialization of Entity Enterprises or the Inhibition of Enterprise Innovation——Based on the Empirical Study of Chinese Manufacturing Listed Companies [J]. Nankai Management Review, 2017, 20 (01):155-166.
[30]
Aghion P., N Bloom., Blundell R., Griffith R., Howitt P. Competition and Innovation: An Inverted U Relationship [J]. Quarterly Journal of Economics. 2005. 120 (2): 701-728.
[31]
Hashmi A R. Competition and Innovation:The Inverted-U Relationship Revisited [J]. Social Science Electronic Publishing. 2011. 95 (5): 1653-1668.
[32]
King R G., Levine R. Finance and Growth: Schumpeter might be right [J]. Quarterly Journal of Economic. 1993. (108): 717-738.
[33]
Levine R., Zervos S., Stock Markets. Bank and Economic Growth[J].American Economic Review. 1998. 88 (3):537-558.
[34]
Palley T I. Financialization: What it is and Why it Matters [J]. Social Science Electronic Publishing, 2007, 26 (9):9-15.
[35]
Xu Hao, Feng Tao, Zhang Lei. Financial Development, Government Intervention and Capital Allocation Efficiency——Based on China's Empirical Analysis from 1978 to 2013 [J]. Shanghai Economic Research, 2015 (10):40-48.
[36]
Zhang Chengsi, Zhang Buzhen. Re-discussion on Finance and Real Economy: The Perspective of Economic Financialization [J]. Economic History, 2015 (06): 56-66.
[37]
Zhu Jigao, Lu Zhengfei. Monetary Policy, Enterprise Growth and Changes in Cash Holdings [J]. Management World, 2009 (3): 152-158.
ADDRESS
Science Publishing Group
1 Rockefeller Plaza,
10th and 11th Floors,
New York, NY 10020
U.S.A.
Tel: (001)347-983-5186