TITLE:
Economic Policy Uncertainty and Venture Capital: Evidence from China
AUTHORS:
Aoyang Zhang
KEYWORDS:
China, Economic Policy Uncertainty, Venture Capital
JOURNAL NAME:
Open Journal of Business and Management,
Vol.11 No.4,
July
12,
2023
ABSTRACT: Venture capital plays a crucial role in driving the growth
of the new economy. However, frequent changes in economic policies can present
both opportunities and challenges for venture capital investment. In this
study, we conducted an empirical analysis of the relationship between economic
policy uncertainty and venture capital investment using provincial-level data
from China for the period 2010-2018. Our results indicate that increasing
economic policy uncertainty has a negative impact on the growth of venture
capital investment, with the magnitude of this effect varying significantly
across funding rounds and industries. Further analysis suggests that increasing
economic policy uncertainty exacerbates firms’ business risks, which in turn
reduces venture capital inflows. Our findings contribute to the literature on
the impact of economic policy uncertainty on venture capital investment and
provide insights for policymakers seeking to foster the development of venture
capital and promote innovation.