Financing Creative Destruction
AbstractThis paper uncovers evidence of s potentially important channel linking financial development to growth: the financing of innovations introduced by entrepreneurs. Using internationally comparable data on European countries, entry and exit in research-intensive industries are found to be disproportionately sensitive to the level of financial development. Furthermore, financial development is related to increased R&D spending. The results are robust to several different measures of financial development, and are supported by surveys of the sources of finance used by entrepreneurs. The evidence suggests that intellectual property rights provide the institutional underpinning for financial markets to direct funds towards innovative entrepreneurs.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 22348.
Date of creation: 10 Dec 2009
Date of revision:
Entry; exit; financial development; creative destruction; R&D intensity; entrepreneurship; intellectual property rights.;
Find related papers by JEL classification:
- G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-02 (All new papers)
- NEP-ENT-2010-05-02 (Entrepreneurship)
- NEP-INO-2010-05-02 (Innovation)
- NEP-IPR-2010-05-02 (Intellectual Property Rights)
- NEP-SBM-2010-05-02 (Small Business Management)
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.:
- Hellmann, Thomas & Puri, Manju, 2000. "The Interaction between Product Market and Financing Strategy: The Role of Venture Capital," Review of Financial Studies, Society for Financial Studies, vol. 13(4), pages 959-84.
- Stijn Claessens & Luc Laeven, 2003.
"Financial Development, Property Rights, and Growth,"
Journal of Finance,
American Finance Association, vol. 58(6), pages 2401-2436, December.
- Claessens, Stijn & Laeven, Luc, 2002. "Financial Development, Property Rights and Growth," CEPR Discussion Papers 3295, C.E.P.R. Discussion Papers.
- Claessens, Stijn & Laeven, Luc, 2002. "Financial development, property rights, and growth," Policy Research Working Paper Series 2924, The World Bank.
- King, Robert G & Levine, Ross, 1993.
"Finance and Growth: Schumpeter Might Be Right,"
The Quarterly Journal of Economics,
MIT Press, vol. 108(3), pages 717-37, August.
- Klapper, Leora & Laeven, Luc & Rajan, Raghuram, 2006. "Entry regulation as a barrier to entrepreneurship," Journal of Financial Economics, Elsevier, vol. 82(3), pages 591-629, December.
- Paul Romer, 1991.
"Endogenous Technological Change,"
NBER Working Papers
3210, National Bureau of Economic Research, Inc.
- Geroski, Paul A, 1989. "Entry, Innovation and Productivity Growth," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 572-78, November.
- Aghion, P. & Howitt, P., 1989.
"A Model Of Growth Through Creative Destruction,"
527, Massachusetts Institute of Technology (MIT), Department of Economics.
- Aghion, P. & Howitt, P., 1990. "A Model Of Growth Through Creative Destruction," DELTA Working Papers 90-12, DELTA (Ecole normale supérieure).
- Aghion, P. & Howitt, P., 1989. "A Model Of Growth Through Creative Destruction," UWO Department of Economics Working Papers 8904, University of Western Ontario, Department of Economics.
- Philippe Aghion & Peter Howitt, 1990. "A Model of Growth Through Creative Destruction," NBER Working Papers 3223, National Bureau of Economic Research, Inc.
- Jonathan Eaton & Samuel Kortum, 2000.
"Trade in Capital Goods,"
Boston University - Department of Economics - The Institute for Economic Development Working Papers Series
dp-109, Boston University - Department of Economics.
- Nicola Brandt, 2004. "Business Dynamics in Europe," OECD Science, Technology and Industry Working Papers 2004/1, OECD Publishing.
- Geert Bekaert & Campbell R. Harvey & Christian Lundblad, 2001.
"Does Financial Liberalization Spur Growth?,"
NBER Working Papers
8245, National Bureau of Economic Research, Inc.
- Marco Cagetti & Mariacristina De Nardi, 2003.
"Entrepreneurship, frictions, and wealth,"
322, Federal Reserve Bank of Minneapolis.
- Edward P. Lazear, 2004. "Balanced Skills and Entrepreneurship," American Economic Review, American Economic Association, vol. 94(2), pages 208-211, May.
- Anton, James J & Yao, Dennis A, 1994. "Expropriation and Inventions: Appropriable Rents in the Absence of Property Rights," American Economic Review, American Economic Association, vol. 84(1), pages 190-209, March.
- North, Douglass C., 1984. "Government and the Cost of Exchange in History," The Journal of Economic History, Cambridge University Press, vol. 44(02), pages 255-264, June.
- Daron Acemoglu & Simon Johnson, 2003.
NBER Working Papers
9934, National Bureau of Economic Research, Inc.
- Anna Ilyina & Roberto M. Samaniego, 2008. "Technology and Finance," IMF Working Papers 08/182, International Monetary Fund.
- White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
- Maria Fuensanta Morales, 2000.
"Financial Intermediation in a Model of Growth Through Creative Destruction,"
Econometric Society World Congress 2000 Contributed Papers
0914, Econometric Society.
- Morales, Mar a F., 2003. "Financial Intermediation In A Model Of Growth Through Creative Destruction," Macroeconomic Dynamics, Cambridge University Press, vol. 7(03), pages 363-393, June.
- Maria Fuensanta Morales, 2001. "Financial Intermediation in a Model of Growth through Creative Destruction," UFAE and IAE Working Papers 487.01, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Ilyina, Anna & Samaniego, Roberto, 2012. "Structural change and financing constraints," Journal of Monetary Economics, Elsevier, vol. 59(2), pages 166-179.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.