Abstract: Financing availability is the key to enterprises’ technological innovation. Firstly, from the perspective of“economic politicians”, this paper analyzes the formation mechanism of relational financing in China and its crowding-out effect on enterprises’ technological innovation. Secondly, it analyzes the regulating effect of business environment on the relationship between the relational financing and enterprises’ technological innovation. Finally, it measures the credit ratio of the state-owned sector and conducts an empirical analysis with the data of 2644 companies during the period of 2008-2017 as the samples. The results show that: (1) relational financing has a significant crowding-out effect on enterprises’ technological innovation, and this effect is strongest in the western region and significantly declined after the 18th National Congress of CPC; (2) optimizing the business environment can weaken the crowding-out effect of relational financing on enterprises’ technological innovation, and this effect is strongest in the western region and more significant after the 18th National Congress of CPC; (3) the crowding-out effect of relational financing on enterprises’ technological innovation is more prominent in high-tech enterprises, and optimizing the business environment has a more significant adjustment effect on the relationship between the two.

Key words: business environment; relational financing; technological innovation; enterprise heterogeneity