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Banks and Innovation: Microeconometric Evidence on Italian Firms

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Author Info
Luigi Benfratello () (University of Turin)
Fabio Schiantarelli () (Boston College and IZA Bonn)
Alessandro Sembenelli () (University of Turin)

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Abstract

In this paper we investigate the effect of local banking development on firms’ innovative activities, using a rich data set on innovation for a large number of Italian firms over the 1990’s. There is evidence that banking development affects the probability of process innovation, particularly for small firms and for firms in high(er) tech sectors and in sectors more dependent upon external finance. The evidence for product innovation is weaker. There is also some evidence that banking development reduces the cash flow sensitivity of fixed investment spending, particularly for small firms, and that it increases the probability they will engage in R&D.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2032.

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Length: 43 pages
Date of creation: Mar 2006
Date of revision:
Handle: RePEc:iza:izadps:dp2032

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Related research
Keywords: banks; financial development; innovation; R&D; investment;

Other versions of this item:

Find related papers by JEL classification:
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Silvia Giannangeli & Giorgio Fagiolo & Massimo Molinari, 2008. "Financial Structure and Corporate Growth: Evidence from Italian Panel Data," LEM Papers Series 2008/17, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
  2. Masami Imai, 2008. "Crowding-Out Effects of a Government-Owned Depository Institution: Evidence from a Natural Experiment in Japan," Wesleyan Economics Working Papers 2008-003, Wesleyan University, Department of Economics. [Downloadable!]
  3. Giannetti, C., 2009. "Relationship Lending and Firm Innovativeness," Discussion Paper 2009-08, Tilburg University, Center for Economic Research. [Downloadable!]
  4. Ayyagari, Meghana & Demirguc-Kunt, Asli & Maksimovic, Vojislav, 2007. "Firm innovation in emerging markets : the roles of governance and finance," Policy Research Working Paper Series 4157, The World Bank. [Downloadable!]
  5. Andrea Caggese, 2006. "Entrepreneurial Risk, Investment and Innovation," Economics Working Papers 1011, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
    Other versions:
  6. Francesca Gagliardi, 2009. "Financial development and the growth of cooperative firms," Small Business Economics, Springer, vol. 32(4), pages 439-464, April. [Downloadable!] (restricted)
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