Capital Market Liberalization and Manufacturing Firm Innovation: Evidence from the Shanghai-Shenzhen-Hong Kong Stock Connect

An active and open capital market plays a crucial role in guiding the allocation of financial resources and supporting innovation in manufacturing enterprises. This study examines the issue from the perspective of market macrostructure, utilizing data from listed manufacturing enterprises spanning from 2010 to 2022 as samples. By constructing a multi-period difference-in-differences model, it verifies that the opening-up of the capital market, represented by the Shanghai-Shenzhen-Hong Kong Stock Connect, promotes innovation in manufacturing enterprises. This conclusion remains valid after passing relevant robustness tests. Heterogeneity analysis reveals that this promotional effect is more pronounced in non-state-owned enterprises, manufacturing enterprises with relatively low information transparency, and those with higher institutional ownership. Mechanism analysis shows that the opening-up of the capital market fosters innovation in manufacturing enterprises by enhancing investment efficiency, alleviating financing constraints, and improving the information environment of enterprises. The research findings indicate that the opening-up of the capital market plays a significant role in promoting innovation in manufacturing enterprises and achieving high-quality economic development, providing theoretical support for further deepening capital market reforms and expanding capital market openness.