Intellectual Property Protection, Financial Innovation and Corporate Innovation: Evidence from a Quasi-Natural Experiment in China

Using China's staggered intellectual property pilot and demonstration city (IPPDC) policy and the difference-in-differences method, this study assesses the effect of intellectual property (IP) protection on corporate innovation. The policy significantly stimulates corporate innovation investment and quality due to enhanced IP administrative enforcement after policy implementation. Financial innovation mitigates information asymmetry and negative spillovers, promoting treated firms' technological development. By substituting high-failure-tolerance institutional investors, IP pledge financing helps treated firms to fund innovation activities. This study reveals the IP protection effect on corporate innovation, providing insights for emerging economies to formulate public policies and finance systems to achieve innovation-driven development.