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Banking systems, innovations, intellectual property protections, and financial markets: Evidence from China

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  • Hsu, Po-Hsuan
  • Wang, Chong
  • Wu, Chaopeng

Abstract

One unique feature of the emerging economies in Asia is the rich variation in the development of financial systems and technological sectors across different geographical areas. This unbalanced evolution provides us a potentially more powerful setting to investigate the dynamics among banking systems, innovations, intellectual property (IP) protections, and stock market reactions that are especially useful in understanding the policy–finance–innovation nexus in emerging economies. Using newly available data from China, this study confirms the nurturing role of financial systems on innovations, the value-enhancing function of firms' innovative activities, and the lead–lag predictive role of innovations on stock returns, in the context of emerging economies. More importantly, the study documents that stronger provincial IP protections reduce patent piracy and hence enhance local firms' market values.

Suggested Citation

  • Hsu, Po-Hsuan & Wang, Chong & Wu, Chaopeng, 2013. "Banking systems, innovations, intellectual property protections, and financial markets: Evidence from China," Journal of Business Research, Elsevier, vol. 66(12), pages 2390-2396.
    • Handle: RePEc:eee:jbrese:v:66:y:2013:i:12:p:2390-2396
    DOI: 10.1016/j.jbusres.2013.05.025
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    3. Luo, Lianfa & Cheng, Zhiming & Ye, Qingqing & Cheng, Yanjun & Smyth, Russell & Yang, Zhiqing & Zhang, Le, 2024. "Nonmonetary awards and innovation: Evidence from winning China's Top Brand Contest," China Economic Review, Elsevier, vol. 86(C).
    4. Zhou, Kevin Zheng & Wang, Kui & Xu, Dean & Xie, En, 2022. "Drinking poison to quench thirst: Does bribery foster firm performance in China?," Journal of Business Research, Elsevier, vol. 147(C), pages 505-517.
    5. Lily H. Fang & Josh Lerner & Chaopeng Wu, 2017. "Intellectual Property Rights Protection, Ownership, and Innovation: Evidence from China," The Review of Financial Studies, Society for Financial Studies, vol. 30(7), pages 2446-2477.
    6. Ma, Zhenzhong & Yu, Mingyang & Gao, Chongyan & Zhou, Jieru & Yang, Zhenning, 2015. "Institutional constraints of product innovation in China: Evidence from international joint ventures," Journal of Business Research, Elsevier, vol. 68(5), pages 949-956.
    7. Christodoulou, Demetris & Lev, Baruch & Ma, Le, 2018. "The productivity of Chinese patents: The role of business area and ownership type," International Journal of Production Economics, Elsevier, vol. 199(C), pages 107-124.
    8. Xiang Yan & Yongchun Huang, 2021. "Is there a nonlinear economic threshold effect of financial development on the efficiency of sci‐tech innovation? An empirical test from the Yangtze River Economic Belt," Growth and Change, Wiley Blackwell, vol. 52(3), pages 1387-1409, September.
    9. Li, Junwei, 2024. "Impact of financial development on innovation efficiency of high-tech industrial development zones in Chinese cities," Technology in Society, Elsevier, vol. 76(C).
    10. Lin Tian & Liang Han & Biao Mi, 2020. "Bank competition, information specialization and innovation," Review of Quantitative Finance and Accounting, Springer, vol. 54(3), pages 1011-1035, April.
    11. Danlin Shen & Carl R. Chen & Xinyan Yan & Zhihong Yi, 2022. "Do credit market accessibility and legal protection shape corporate innovation?," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 45(3), pages 719-754, September.
    12. Hsu, David H. & Hsu, Po-Hsuan & Zhao, Qifeng, 2021. "Rich on paper? Chinese firms’ academic publications, patents, and market value," Research Policy, Elsevier, vol. 50(9).
    13. Ata Allah Taleizadeh & Mahsa Noori-daryan & Mohammad Reza Soltani & Reza Askari, 2022. "Optimal pricing and ordering digital goods under piracy using game theory," Annals of Operations Research, Springer, vol. 315(2), pages 931-968, August.
    14. Huang, Yeu-Shiang & Lin, Shin-Hua & Fang, Chih-Chiang, 2017. "Pricing and coordination with consideration of piracy for digital goods in supply chains," Journal of Business Research, Elsevier, vol. 77(C), pages 30-40.
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    16. Li Li & Jean Chen & Hongli Gao & Li Xie, 2019. "The certification effect of government R&D subsidies on innovative entrepreneurial firms’ access to bank finance: evidence from China," Small Business Economics, Springer, vol. 52(1), pages 241-259, January.

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