Does Enforcement of Intellectual Property Rights Matter in China ...

Table 4: The effect of IP rights enforcement on informal financing
The dependent variable is the proportion of informal financing (debt minus bank loan and trade credit) in the newly raised debt.
Only firms that raised new debt exceeding 5% of their total assets in 2004 and 2005 enter the regressions, because the data on bank
loan is available only in these two years. For a description of all the other variables, see Appendix 3. All regressions include
industry dummies as part of the control variables. All the independent variables are lagged by one year. The coefficients reported
in Column (1), (2), (4) and (5) are from OLS regressions. Column (3) and (6) present results obtained from 2SLS regressions, with
the instruments being the provincial number of Christian colleges till 1920 (Christian Colleges) and the dummy which equals 1
when a province had a British concession during the late Qing Dynasty (British Settlement). Other covariates in the first-stage
regression are omitted for presentational convenience. The numbers in the parentheses are t-stat based on standard errors adjusted
for heteroskedasticity and the potential clustering of the residual at the provincial level. ***, **, * indicate the coefficient is
statistically different from zero at the 1-, 5-, and 10-percent level, respectively.
(1) (2) (3) (4) (5) (6)
2SLS: Second
2SLS: Second
Model OLS OLS
OLS OLS
stage
stage
Dependent variables
Informal
financing
ratio
Informal
financing
ratio
Informal
financing
ratio
Informal
financing
ratio
Informal
financing
ratio
Informal
financing
ratio
IPP1 0.220 0.187 1.099
(2.27)** (1.80)* (2.69)***
IPP2 0.020 0.021 0.013
(15.15)*** (10.20)*** (3.18)***
Corruption Control 0.065 0.076 0.031 0.044
(7.56)*** (7.56)*** (3.26)*** (4.03)***
Banking Development -0.034 -0.074 -0.046 -0.040
(-2.91)*** (-3.57)*** (-4.07)*** (-3.55)***
GDP Growth 1.265 1.414 2.774 2.224
(5.20)*** (5.42)*** (9.01)*** (5.73)***
University 0.006 0.005 0.003 0.005
(7.38)*** (5.11)*** (3.64)*** (4.14)***
Metropolis -0.062 -0.029 -0.006 -0.030
(-4.80)*** (-1.40) (-0.40) (-1.65)*
Patent Dummy -0.018 -0.019 -0.008 -0.022 -0.022 -0.025
(-0.81) (0.88) (-0.39) (-1.03) (-1.06) (1.17)
R&D Intensity 0.091 0.061 0.090 0.086 0.096 0.095
(1.40) (0.94) (1.36) (1.35) (1.51) (1.49)
Sales Growth 0.004 0.002 0.002 0.002 0.002 0.002
(2.68)*** (1.76)* (1.33) (1.26) (1.12) (1.41)
Intangible/TA -0.165 -0.215 -0.217 -0.162 -0.206 -0.205
(-2.78)*** (-3.69)*** (-3.74)*** (-2.88)*** (-3.68)*** (-3.65)***
ROA 0.011 0.022 0.018 0.043 0.023 0.019
(0.19) (0.40) (0.33) (0.76) (0.41) (0.35)
Leverage -0.141 -0.134 -0.133 -0.122 -0.135 -0.134
(-4.61)*** (-4.47)*** (-4.41)*** (-4.07)*** (-4.50)*** (-4.48)***
Log(assets) -0.075 -0.072 -0.069 -0.064 -0.064 -0.066
(-9.79)*** (-9.56)*** (-9.03)*** (-8.52)*** (-8.58)*** (-8.75)***
Log(age) 0.002 0.002 0.011 0.021 0.012 0.010
(0.12) (0.17) (0.83) (1.60) (0.94) (0.74)
Constant 1.080 0.180 -0.349 0.882 0.264 0.260
(7.35)*** (1.19) (1.24) (6.84)*** (1.81)* (1.77)*
Observations 6,487 6,487 6,487 6,125 6,125 6,125
R-squared 6.60% 11.13% 9.56% 9.71% 13.06% 12.82%
First Stage
Regression
First Stage
Regression
Dependent variables IPP1 IPP2
Christian Colleges 0.011 0.619
(5.94)*** (6.21)***
British Settlement 0.060 6.998
(17.32)*** (31.14)***
Observations 6,487 6,125
R-squared 26.67% 73.14%
Partial F-test of IVs 202.75 (p=0.00) 1,124.34 (p=0.00)
J stat. from
overidentification test
1.284 (p=0.257) 2.717 (p=0.100)
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