Impact of technology finance on the development of emerging industries: comparison between Chinese government and market

While governments worldwide heavily invest in technology finance (TF) to catalyze emerging industries, the relative efficacy of public versus market mechanisms remains a critical puzzle. Using prefecture-level panel data from China for 2010–2021, this paper employs two-way fixed effects and panel threshold models to examine the relationships of public technology finance (PTF) and market technology finance (MTF) with the development of emerging industries (DEI). The results show that PTF has no significant standalone association with DEI, but its relationship with DEI is stronger at higher levels of MTF. The positive MTF–DEI relationship is concentrated in technology loans from financial institutions. Innovation quality is a potential channel in the MTF–DEI relationship, which is stronger above the estimated quality threshold. Higher government support is associated with a stronger MTF–DEI relationship, while the positive PTF–MTF interaction is weaker above the estimated support threshold. Both PTF and MTF have stronger positive relationships with DEI in cities with more developed digital economies. These findings provide new evidence for designing technology finance policies that combine market allocation with targeted public support.