The Impact of Financial Networks on Innovation Diffusion
The value of innovation lies not only in its initial creation but also in its diffusion across sectors,industries,and regions.Promoting regional innovation diffusion is crucial for achieving coordinated and high-quality regional economic growth.In today's world,increased friction in cross-border innovation diffusion-driven by Western technological blockades,trade conflicts,and geopolitical tensions-has shifted the primary drivers of economic growth from cross-border resource allocation and innovation to domestic optimized resource allocation and regional innovation diffusion.Therefore,fostering innovation diffusion within regions has become increasingly crucial,necessitating a deeper understanding of its underlying mechanisms.This study uses full-scale patent citation data in China to measure regional innovation diffusion and examines the impact of financial network expansion,specifically through the establishment of non-local bank branches.The findings reveal that non-local bank branches significantly enhance innovation diffusion from headquarters cities to branch cities,primarily through increased investments by firms from the former in the latter.Further analysis highlights three key findings.First,the effect is most pronounced between cities with similar industrial and technological structures and comparable technological frontiers.Second,larger market sizes amplify the positive impact of financial networks on innovation diffusion.Third,well-developed transportation infrastructure and higher levels of human capital further strengthen this effect.Lastly,traditional administrative boundaries and cultural differences remain implicit barriers to fully realizing innovation diffusion across regions.This study makes three key contributions.First,it provides novel micro-level evidence on how financial networks drive economic development through inter-city interactions.Second,it introduces a formal institutional framework to explain innovation diffusion from the perspective of financial networks.Third,it underscores the critical role of financial markets in fostering interregional connectivity.These insights offer a fresh perspective on how financial development drives economic growth through innovation diffusion.The study also provides policy recommendations for enhancing domestic flows and building a unified national market,including deepening financial system reforms,easing restrictions on bank branch expansion,and establishing an interconnected financial system to enhance interregional exchanges.Furthermore,it emphasizes promoting cross-regional investments by firms and expanding capital flows between regions.Future research could explore how financial networks influence regional innovation diffusion under different institutional environments and types of technological innovation.Such studies would provide a more comprehensive theoretical and practical basis for optimizing innovation diffusion mechanisms.
Innovation DiffusionFinancial NetworksUnified National Market
NETL
NSTL
万方数据
