An empirical study of China’s financial institutions holding non-financial listed companies’ shares on company innovation - a moderated mediating effect

Shiqing  Zhang; Wenqi  Li; Brian Sheng-Xian  Teo; Jaizah  Othman

doi:10.33094/ijaefa.v15i2.862

Authors

Shiqing Zhang Graduate School of Management and Science University, Shah Alam, Selangor, Malaysia.
Wenqi Li School of Economics and Trade, Henan University of Technology, Zhengzhou, China.
Brian Sheng-Xian Teo International Academic Affairs Department, Management and Science University, Shah Alam, Selangor, Malaysia.
Jaizah Othman Faculty of Business Management and Professional Studies, Management and Science University, Shah Alam, Selangor, Malaysia.

DOI:

https://doi.org/10.33094/ijaefa.v15i2.862

Keywords:

China’s a-shares non-financial listed companies, Combination of industry and finance, Financing constraints, Innovation of non-financial companies, Monetary policy.

Abstract

The economy of China is gradually transforming from high-speed development to high-quality development. The innovation in companies is conducive to companies’ sustainable development, but innovation is often accompanied by risks and instability that needs the support of a large amount of capital. Financial institutions holding non-financial companies’ shares are favourable in alleviating the financial constraints of companies and they are of great significance in promotion of technological innovation and industrial technological upgradation of non-financial companies. The data for this study is selected from China’s a-share non-financial listed companies from 2013 to 2020 as research samples and data is empirically tested to show the effects of the industry-finance combination on non-financial companies and their technological innovation by creating the multiple regression equation. The test results showed that financial institutions holding non-financial companies’ shares significantly promoted the investment in the innovation of technology in non-financial companies. Through stepwise regression and other methods, it is concluded that financing constraints had a mediating effect on financial institutions holding entity companies’shares and company innovation. Financial institutions holding non-financial companies’ shares could promote technological innovation of companies by easing financial constraints, and the monetary policy as they had a moderating effect on this mediation. In addition, this paper conducted the sub-industries’ test on financial institutions holding non-financial companies’ shares and non-financial companies’ technological innovation through cluster analysis. Moreover, it examined the impact of property rights nature according to the basic national conditions of China. This study offers a new method for the innovation of companies in China and it provides a prerequisite for the high-quality economic development and industrial upgrading of China.