The Crowding-Out Effect of Real Estate Markets on Corporate Innovation: Evidence from China

37 Pages Posted: 25 Jan 2016 Last revised: 2 Sep 2016

See all articles by Jing Shi

Jing Shi

Macquarie University

Yongxiang Wang

University of Southern California - Marshall School of Business

Weixing Wu

University of International Business and Economics (UIBE)

tony zhong

Renmin University of China

Date Written: August 30, 2016

Abstract

Real estate bubbles can increase collateral value, thus relaxing financial constraints, which might spur innovation. However, they might also crowd out R&D expenditures, thus stifling corporate innovation. This paper shows that real estate prices negatively affect both corporate R&D and patents in China, suggesting a strong crowding out effect. We further provide suggestive evidence that managerial myopia might partly account for the crowding out effect. Our study illustrates the innovation cost of a booming real estate market.

Keywords: Real Estate Markets, Innovation, Crowding Out Effect, Managerial Myopia, China

JEL Classification: G31, R30, O31, P20, D22

Suggested Citation

Shi, Jing and Wang, Yongxiang and Wu, Weixing and zhong, tony, The Crowding-Out Effect of Real Estate Markets on Corporate Innovation: Evidence from China (August 30, 2016). Asian Finance Association (AsianFA) 2016 Conference, Available at SSRN: https://ssrn.com/abstract=2720314 or http://dx.doi.org/10.2139/ssrn.2720314

Jing Shi (Contact Author)

Macquarie University ( email )

Eastern Rd.
North Ryde
Sydney, NSW 2109
Australia

HOME PAGE: http://https://researchers.mq.edu.au/en/persons/jing-shi

Yongxiang Wang

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States

Weixing Wu

University of International Business and Economics (UIBE) ( email )

10, Huixin Dongjie
Changyang District
Beijing, Beijing 100029
China

Tony Zhong

Renmin University of China ( email )

Room B906
Xianjin Building
Beijing, Beijing 100872
China

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