Abstract
Based on the sample of Chinese A-share listed companies from 2011-2016, this paper examines the impact of RMB exchange rate depreciation on enterprise innovation from the perspective of investment motivation. The study found that the devaluation of the RMB exchange rate significantly inhibited the innovation of export enterprises. In the sample of export enterprises, this paper uses OLS regression to find that RMB devaluation significantly inhibits the innovation of export enterprises. Further study on the exporting enterprises group found that this conclusion is only significant in the sub-sample of private enterprises, small scale enterprises and enterprises with high industry competition degree. Because these enterprises have a stronger motivation to pursue profits, in case that the depreciation of RMB exchange rate is conducive to exports, they are more likely to increase their investment in production in order to expand their exports, ignoring innovation investment. This shows that the export enterprises are in the face of the short-term profit-making opportunities arising from the devaluation of the RMB, and the weakening of motivation for investment innovation is the mechanism of devaluation of the RMB to curb enterprise innovation. Finally, in the robustness test, this paper considers the lagging effect of RMB depreciation, and replaces the innovation index of enterprises, and the results are still consistent with the main regression results.
Highlights
As an important price factor in opening up the macro-economy, the exchange rate plays an important role in the transformation of economic growth mode
Based on the sample of Chinese A-share listed companies from 2011-2016, this paper examines the impact of RMB exchange rate depreciation on enterprise innovation from the perspective of investment motivation
This paper finds that the depreciation of RMB exchange rate may affect the innovation of enterprises by affecting the investment motivation of the enterprises, and concludes that the transformation of investment motivation in the case of RMB depreciation is a new viewpoint that the exchange rate changes affect the innovation mechanism of enterprises
Summary
As an important price factor in opening up the macro-economy, the exchange rate plays an important role in the transformation of economic growth mode. This paper studies the microeconomic impact of depreciation of the RMB in recent years and finds that devaluation of the RMB inhibits exports enterprise innovation. This reveals the important role of exchange rate in the transformation of China’s economic growth-driven mode from the micro-level and can provide important reference information for China to formulate its exchange rate policy and promote economic restructuring, which is of great practical significance. The existing literature has mainly studied the relationship between exchange rate appreciation and enterprise innovation, and there is almost no literature on the relationship between devaluation and innovation. The impact mechanism of exchange rate appreciation and devaluation on enterprise innovation may be different. This paper finds that the depreciation of RMB exchange rate may affect the innovation of enterprises by affecting the investment motivation of the enterprises, and concludes that the transformation of investment motivation in the case of RMB depreciation is a new viewpoint that the exchange rate changes affect the innovation mechanism of enterprises
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