Since the commercialization of housing in China in 1998, the total investment in real estate has increased from the initial 0.36 trillion yuan to 10.26 trillion yuan in 2016, with an average annual growth rate of 20%. A characteristic fact is that the sharp increase in real estate investment comes not only from traditional real estate companies, but also from a large number of non-real estate enterprises that are attracted by high returns and investments in real estate through equity participation, joint ventures, mergers or acquisitions, or subsidiaries and branches. The rapid spread of these behaviors will inevitably have a profound impact on the micro-enterprises themselves, and the entire real economy. In theory, on the one hand, enterprises investing in real estate business which is easy to appreciate have credit mitigation effects that they can alleviate their own financing constraints through getting loan mortgages or sales. On the other hand, since the operation of real estate business requires a large amount of capital investment and it is easy to get profit in the short term, enterprises have the resource reallocation effect that they deviate from their main business and tend to be hollow. The existing research shows that the impact of housing prices on microeconomic individuals is diverse, depending on the relative strength of multiple effects. As regard to the relevant literature in this article, Chaney and Thesmar（2012）, Yu and Tan（2015）have found that the increase of the real estate price has a positive effect on financing and investment. However, a large number of studies support the resource reallocation effect that they deviate from their main business and slow the pace of innovation（Chen, et al., 2015）. The existing studies provide a good foundation for analyzing the impact of real estate on the real economy, but will corporate innovation increase after it withdraws from real estate business? Based on the quasi-natural experiment of " the restriction of real estate investment” issued by the Administration Commission of the State Council and State-owned Assets Supervision in relation to central enterprises in 2010, this article uses the 2005—2014 A-share listed company data and the DID model to examine whether non-real estate industrial enterprises withdrawing from the real estate market have promoted innovation. We find that the companies affected by the policy has more significantly improved the level of innovation compared to the companies that are not affected by the policy. However, this promotion effect has only been effective for a short period of time and has not been able to maintain for a long time. In addition, the role of the policy for innovation has been closely related to the extent to the companies which have previously been involved in real estate business. That means the higher the level of investing in real estate business is, the greater the impact of " the restriction of real estate investment” is. Furthermore, we also find that samples in the group with high political promotion opportunities and poor corporate governance make significant improvement in the creation; " the restriction of real estate investment” promotes enterprises’ innovation mainly through the investment in fixed assets of enterprises and raising R&D expenditure. The main contributions of the article are as following: （1）The existing literature remains at the macro level to discuss the important topic about how real estate affects the technological innovation. This article is not only based on the empirical data of micro-enterprises, but also focuses on the impact of withdrawing from rather than entering the real estate business on the technological innovation, and it provides direct evidence that non-real estate enterprises can promote the technological innovation by withdrawing from real estate business; （2）This article uses the quasi-natural experiment of " the restriction of real estate investment” issued by the Administration Commission of the State Council and State-owned Assets Supervision in relation to central enterprises in 2010. It provides a causal identification between technological innovations by DID and Triple Difference. （3）This article further studies the heterogeneity of " the restriction of real estate investment” in different situations and the specific mechanism that can improve the technological innovation.
Does “the Restriction of Real Estate Investment” Facilitate Technology Innovation? — Evidence from a Quasi-natural Experiment of Central State-owned Enterprises
Journal of Finance and Economics Vol. 44, Issue 09, pp. 95 - 108 (2018) DOI:10.16538/j.cnki.jfe.2018.09.006
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Cite this article
Meng Qingxi, Gong Xiaoyun, Lin Kai. Does “the Restriction of Real Estate Investment” Facilitate Technology Innovation? — Evidence from a Quasi-natural Experiment of Central State-owned Enterprises[J]. Journal of Finance and Economics, 2018, 44(9): 95-108.
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