A study of interaction between loans of financial institutions and technological innovation of the high-tech industries

Abstract

Based on the data from 1995 to 2008, this paper sets up a VAR model which makes research on the dynamic relationship between loans of financial institutions and technological innovation of the high-tech industries. The result shows that there is a long-term stable balance relationship between loans of financial institutions and technological innovation of the high-tech industries. Loans of financial institutions has an important driving effect on scientific and technological innovation of the high-tech industries, but no Granger causality relationship has been found. The imbalance between the risk and profit is the main reason why the financial institutions reduce loans to the high-tech industries.