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Credit supply and corporate innovation

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

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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File URL: http://www.sciencedirect.com/science/article/pii/S0304405X1300113X
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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
DOI: 10.1016/j.jfineco.2013.04.006
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505576

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