Abstract

Based on product market competition, this paper studies the heterogeneity of monetary policy in promoting firms’ innovation. Specifically, taking 1420 listed companies from 2013 to 2018 as samples, this paper estimates the impact of monetary policy and product market competition on R&D investment density, and the moderating effect of competition on policy effect by using the fixed effect model. This study shows that a loose monetary policy shock relaxes firms’ financing constraints and increases their R&D investment capacity. In response, firms facing greater competitive pressures in product markets choose to increase their R&D investment density, while firms with less competitive pressures lack incentives for R&D investment.

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