Abstract: Can capital market opening to the outside world promote higher quality development of the real economy? This has always been an issue focused both by the government sector and the academic world. By making use of the quasi-natural experiment of the implementation of“Shanghai-Hong Kong Stock Connect”trading system and from the perspective of corporate innovation, this paper examines the impact of capital market opening on the development of real economy. The results show that the implementation of the trading system of Shanghai-Hong Kong Stock Connect has improved the level of corporate innovation, and this conclusion is valid after a series of robustness tests. The results of the analysis of the affecting mechanism show that the implementation of the trading system of Shanghai-Hong Kong Stock Connect can benefit enterprises through the three channels, i.e., optimizing the corporate information environment, improving their governance levels and improving their risk bearing levels, thus their innovation level will be improved. In addition, in the context of higher efficiency of financial contracts execution and more intensified product market competition, the implementation of the trading system of Shanghai-Hong Kong Stock Connect has a more significant promotion effect on corporate innovation. Therefore, China should continue to promote the opening up of the capital market, deepen and improve the connectivity mechanism, strengthen the guidance and cultivation of local investors and information intermediaries, and actively guard against the risks related to the opening up of the capital market, so as to bring more innovative vitality to the real economy.

Key words: capital market opening to the outside world, corporate innovation, Shanghai-Hong Kong Stock Connect, quasi-natural experiment