STUDY ON THE IMPACT OF FINANCING EFFICIENCY ON CORPORATE INNOVATION

Abstract

This study investigates the impact of financing efficiency on corporate innovation in Chinese manufacturing enterprises, with a specific focus on the mediating roles of financing constraints and supply chain finance. Using a sample of 12,186 observations from manufacturing firms spanning 2007 to 2021, the research employs a mixed-methods approach combining Data Envelopment Analysis (DEA) for measuring financing efficiency and panel regression models to test hypotheses. Empirical results confirm a significant positive relationship between financing efficiency and corporate innovation. Mechanism analysis reveals that financing efficiency enhances innovation by alleviating financing constraints and promoting participation in supply chain finance. Additionally, heterogeneity analysis highlights regional disparities, with a stronger impact observed in Central and Western China compared to Eastern China. Further analysis identifies key antecedents of financing efficiency, including corporate governance, operational efficiency, information disclosure, social capital, market competition, and government subsidies, while excessive government regulation exerts a marginal negative effect.

This study bridges theoretical gaps by integrating direct and indirect mechanisms through which financing efficiency influences innovation, and offers actionable insights for policymakers such as targeted support for financially constrained regions and business leaders seeking to enhance innovation through improved financing practices.