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Finance and Innovation System or Chaos

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  • Jesper Lindgaard Christensen
  • Ina Drejer

Abstract

The present paper discusses an important part of the framework conditions for innovation in a number of European countries (France, Italy, Spain, the Netherlands, the United Kingdom) as well Japan and the United States through a comparison of the development of the financial systems in these countries. The main focus is whether a convergence can be observed between what is traditionally perceived as market based and credit based systems respectively. Based on quantitative statistics it is concluded that a convergence has taken place, and it is becoming increasingly more difficult to divide national financial systems into two main categories based on quantitative data alone. But differences still remain, and the paper continues by discussing reasons for convergence and divergence respectively. These reasons include internationalization, differences in industrial structure, as well as changes in national and international regulation. Before turning to a discussion of the policy perspectives of the observed development the paper discusses the financial systems ability to finance different types of transactions.

Suggested Citation

  • Jesper Lindgaard Christensen & Ina Drejer, 1998. "Finance and Innovation System or Chaos," DRUID Working Papers 98-24, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    • Handle: RePEc:aal:abbswp:98-24
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    References listed on IDEAS

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    1. Williamson, Oliver E, 1988. " Corporate Finance and Corporate Governance," Journal of Finance, American Finance Association, vol. 43(3), pages 567-591, July.
    2. Mayer, Colin, 1988. "New issues in corporate finance," European Economic Review, Elsevier, vol. 32(5), pages 1167-1183, June.
    3. Vitols, Sigurt, 1995. "Financial systems and industrial policy in Germany and Great Britain: the limits of convergence," Discussion Papers, Research Unit: Economic Change and Employment FS I 95-311, WZB Berlin Social Science Center.
    4. Giovanni Dosi, 2000. "Finance, Innovation and Industrial Change," Chapters, in: Innovation, Organization and Economic Dynamics, chapter 21, pages 621-641, Edward Elgar Publishing.
    5. Colin Mayer, 1990. "Financial Systems, Corporate Finance, and Economic Development," NBER Chapters, in: Asymmetric Information, Corporate Finance, and Investment, pages 307-332, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Dieter Ernst, 1999. "Responses to the Crisis Constraints to a Rapid Trade Adjustment in East Asia´s Electronics Industry," DRUID Working Papers 99-2, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    2. Márcia Siqueira Rapini, 2008. "Inovação e seu financiamento: as contribuições da nova economia institucional," Textos para Discussão Cedeplar-UFMG td331, Cedeplar, Universidade Federal de Minas Gerais.
    3. Kirsten Foss & Nicolai J. Foss, 1999. "Organizing Economic Experiments The Role of Firms," DRUID Working Papers 99-5, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    4. Huizinga, Harry & Zhu, Dantao, 2006. "Financial Structure and Macroeconomic Volatility: Theory and Evidence," CEPR Discussion Papers 5697, C.E.P.R. Discussion Papers.
    5. Márcia Siqueira Rapini, 2009. "Sistemas financeiros e o financiamento à inovação: algumas reflexões para o Brasil," Textos para Discussão Cedeplar-UFMG td367, Cedeplar, Universidade Federal de Minas Gerais.

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    More about this item

    Keywords

    Financial systems; innovation financing; economic integration and convergence;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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