How does sci-tech finance influence cross-regional investment? Evidence from China’s pilot reform

Deepening the integration of technology and finance is crucial for an innovation-driven development strategy. Using firm-level data on China’s A-share listed companies from 2007 to 2023, this paper exploits the sci-tech finance pilot policy as a quasi-natural experiment to examine how local sci-tech finance initiatives shape firms’ cross-regional investment decisions. We find that the implementation of the pilot policy in destination cities significantly boosts corporate investment across regions. The effect is particularly strong among non-state-owned enterprises, firms led by executives with financial experience, and those headquartered in eastern China. Mechanism analysis reveals two channels: firms are attracted to pilot cities both to tap into dense innovation ecosystems (technology-seeking) and to ease financing constraints (finance-seeking). Further evidence indicates that the policy primarily attracts investment from firms within the same province and generates a siphon effect that diverts investment from neighbouring non-pilot cities. Importantly, such cross-regional investments enhance collaborative innovation between cities and improve the operational performance of investing firms. Our findings offer actionable insights for designing targeted sci-tech finance policies and fostering balanced regional development.