Impacts of patent pledge financing on corporate investment: Evidence from a quasi-natural experiment in China

Patent pledge financing (PPF), emerging as the unification of knowledge capital and financial resources, not only enhances the value of firms' intellectual property but also offers new insights into addressing corporate financing challenges. However, the impact of PPF on corporate investment remains unclear. This study utilizes data from Chinese A-share listed companies to assess how the implementation of PPF pilot policies influences corporate investment through the construction of a difference-in-differences model. We reveal that the PPF pilot policies have significantly stimulated corporate investment by lowering debt financing costs and concurrently expanding investment opportunities. Subsequent analyses suggest that the impact of PPF pilot policies on corporate investment is more pronounced for companies facing higher financing constraints, possessing greater patent value, and operating in regions with lower levels of financial development. This research provides empirical support for the notion that financial innovation mitigates corporate financing challenges and fosters economic growth.