Crowding-in in Venture Capital in China
67 Pages Posted: 30 Jul 2018 Last revised: 15 Aug 2022
Date Written: July 29, 2018
By exploiting a unique policy experiment in China and difference-in-differences methodology, I find that government investments crowd in private investments, with a multiplier of 0.88-0.93. The impact is most pronounced in less developed regions and in the earlier stage of developing the VC sector. Using administrative data, I provide micro-level evidence of the crowding-in effects transmitting in a diminishing pattern through network linkages among limited partners and VC firms, indicating that government investments have a signaling role on private investors.
Keywords: government programs, venture capital, quasi-experiment, crowding-in, social finance, network analysis.
JEL Classification: G24; G28; H76; O38
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