The paper analyses the effect of the stock market on firm innovation through the lens of initial public offering (IPO) using uniquely matched Chinese firm-level data. We find that IPOs lead to an increase in both the quantity and quality of firm innovation activity. In addition, IPOs expand a...

China's financial system has become very large, diversified, and interconnected. This changing financial landscape could potentially produce systemic risks, arising primarily from growing financial interconnectedness. The paper argues that, to address the potential systemic risks, Chinese...