Monetary Policy Uncertainty and Innovation Investment: Financing and Risk Channels

Using panel data on China’s A-share listed companies from 2006 to 2023, this study employs a fixed-effects framework to empirically examine the relationship between monetary policy uncertainty and corporate innovation investment. The results indicate that heightened monetary policy uncertainty significantly suppresses firms’ innovation investment. Further analysis reveals that financing constraints constitute an important mediating channel through which monetary policy uncertainty affects innovation activities. Risk-taking behavior also serves as a significant mediating mechanism in this relationship. In addition, the effects of monetary policy uncertainty on corporate innovation investment exhibit notable heterogeneity across industries: the negative impact is more pronounced in regulated industries than in non-regulated ones, and it differs significantly between high-tech and non-high-tech sectors.