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Credit supply and corporate innovation

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Author Info

  • Amore, Mario Daniele
  • Schneider, Cédric
  • Žaldokas, Alminas

Abstract

We present evidence that banking development plays a key role in technological progress. We focus on manufacturing firms' innovative performance, measured by patent-based metrics, and employ exogenous variations in banking development arising from the staggered deregulation of banking activities across US states during the 1980s and 1990s. We find that interstate banking deregulation had significant beneficial effects on the quantity and quality of innovation activities, especially for firms highly dependent on external capital and located closer to entering banks. Furthermore, we find that these results are strongly driven by a greater ability of deregulated banks to geographically diversify credit risk.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Financial Economics.

Volume (Year): 109 (2013)
Issue (Month): 3 ()
Pages: 835-855

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Handle: RePEc:eee:jfinec:v:109:y:2013:i:3:p:835-855

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Web page: http://www.elsevier.com/locate/inca/505576

Related research

Keywords: Financial development; Banking deregulation; Innovation; Risk diversification;

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References

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Cited by:
  1. Viral V. Acharya & Zhaoxia Xu, 2013. "Financial Dependence and Innovation: The Case of Public versus Private Firms," NBER Working Papers 19708, National Bureau of Economic Research, Inc.

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