Interregional circulation of credit resources and company innovation

Abstract

Although the impact of interest rates, repayment periods, and loan scales on loan consequences has been extensively studied, little attention has been paid to the geographical distance involved in loan transactions. This study collects the addresses of borrowing companies, listed companies, and banks. Nonlocal loans can be distinguished because the regional segmentations in the lending industry reflect the features of provincial boundaries. Using data from Chinese A-share listed companies from 2007 to 2022, this research explores the causes of nonlocal loans and their impact on company innovation. Nonlocal loans are found to address the lack of local credit resources rather than financial constraints, supplementing disposable capital. This interregional circulation of credit resources facilitates innovation, particularly in financially undeveloped areas. This study does not detect research and development manipulation and recognizes the increase in innovation output. The findings have implications for credit resource allocation and balanced regional development.