The Impact Of Financial Development On Enterprise Innovation

China's economy has gradually slowed down under the“new normal”.The economic growth model that relies on the quantity of labor force,resources and capital investment has become unsustainable.To foster new sources of economic growth is China's main proposition in this period.Innovation is the direct motivity to lead development,and it is also a vital factor to facilitate economic restructuring,which determines the future of China's development.As the main part of innovation activities,enterprises need to increase the capacity of independence innovation,which is good for firm's competitiveness and national economy.Innovation activities have the characteristics of long cycle,high risk and high uncertainty,which may lead to financing difficulties,hence innovation activities need the support of the financial system.The developed financial markets play a role in extending financing channels,reducing transaction costs,relieving information asymmetry and improving the efficiency of capital,which promotes enterprise innovation.China's financial development level is relatively backward,and regional difference is obvious.Under the realistic background,this paper attempts to study whether China's financial system can support enterprise innovation,which is of great significance for finding the way of financial system reform,enhancing national innovation capability and promoting economic growth.In order to study the effect of financial development imposing on enterprise innovation ability meticulously,this paper describes the regional financial development level from the perspectives of banking sector and stock market.Based on the existing literature,this paper expounds the mechanism and difference of the two to enterprise innovation respectively.We use the patent data of the listed companies in manufacturing industry from 2006 to 2016 and financial statistics of the provinces to examine the impact of the scale of the banking sector,the efficiency of the banking sector and the scale of the stock market on the quantity and the quality of enterprise patents respectively.The results show that the development of stock market can promote both the quantity and quality of enterprise patents.Raising the loan-to-deposit ratio can promote the quantity of enterprise patents,but has little impact on the quality.The scale of banking sector has no effect on enterprise innovation.From the analysis of the impact channels,the level of risk tolerance in stock market is stronger,its value discovery and risk spreading function help provide financial services to enterprises.Banking sector provides credit supply for low-tech business,which may relieve financing constraints.In addition,in the provinces with higher intellectual property protection,the stock market is more effective in promoting enterprises innovation.Finally,on the basis of the research results and in combination with the current situation of China's financial system,this paper puts forward several suggestions from the perspective of government departments.Firstly,promote the reform of the financial system steadily and accelerate the construction of multi-level capital markets.Secondly,improve the efficiency of the banking sector and encourage credit resources to support the innovative projects.Thirdly,strengthen the protection of intellectual property rights,improve the legal system,and create a good external environment.