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ICT Innovation and Economic Performance: The Role of Financial Intermediation


  • Houben, Aerdt
  • Kakes, Jan


This article considers the relationship between finance and the contribution of Information and Communication Technologies (ICT) to macroeconomic performance. The general characteristics of ICT firms, especially their often "high risk, high return" nature, suggest equity finance is more appropriate than debt finance. Also, the prevalence of information asymmetries tends to favour internal finance and venture capital with management participation. For a group of countries, we analyse correlations between financial structure and the ICT contribution to economic growth. Our results support the view that a market-oriented financial system and a well-developed venture capital market are key factors stimulating the emergence of the so-called "New Economy". This helps explain the considerable gap in productivity growth between the United States and Europe in the second half of the 1990s. Copyright 2002 by WWZ and Helbing & Lichtenhahn Verlag AG

Suggested Citation

  • Houben, Aerdt & Kakes, Jan, 2002. "ICT Innovation and Economic Performance: The Role of Financial Intermediation," Kyklos, Wiley Blackwell, vol. 55(4), pages 543-562.
  • Handle: RePEc:bla:kyklos:v:55:y:2002:i:4:p:543-62

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    References listed on IDEAS

    1. Edward Castronova, 2002. "On Virtual Economies," CESifo Working Paper Series 752, CESifo Group Munich.
    2. Patrick Bajari & Ali Hortacsu, 2002. "Cyberspace Auctions and Pricing Issues: A Review of Empirical Findings," Working Papers 02005, Stanford University, Department of Economics.
    3. Edward Castronova, 2001. "Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier," CESifo Working Paper Series 618, CESifo Group Munich.
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    Cited by:

    1. Allard Bruinshoofd & Leo de Haan, 2005. "Financing the New Economy: Are ICT Firms Really That Different?," DNB Working Papers 077, Netherlands Central Bank, Research Department.
    2. Lee, Sangwon & Nam, Yoonjae & Lee, Seonmi & Son, Hyunjung, 2016. "Determinants of ICT innovations: A cross-country empirical study," Technological Forecasting and Social Change, Elsevier, vol. 110(C), pages 71-77.
    3. Adeline Saillard & Thomas Url, 2011. "Venture Capital in Bank- and Market-based Economies," WIFO Working Papers 389, WIFO.
    4. Horst Feldmann, 2010. "Venture Capital Availability and Labor Market Performance in Industrial Countries: Evidence Based on Survey Data," Kyklos, Wiley Blackwell, vol. 63(1), pages 23-54, February.
    5. Adeline Saillard & Thomas Url, 2011. "Venture capital in bank - and market - based economies," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00593962, HAL.
    6. Adeline Saillard & Thomas Url, 2011. "Venture capital in bank - and market - based economies," Documents de travail du Centre d'Economie de la Sorbonne 11025, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.

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