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Financial System, Innovation and Regional Development: The Relationship between Liquidity Preference and Innovation in Brazil


  • João Prates Romero
  • Frederico G. Jayme


This paper discusses the Brazilian financial system and the impact of liquidity preference on regional development in Brazil. In the Post-Keynesian literature, endogenous money is introduced into economic activity through the credit provided by banks. The degree to which banks exhibit lower or higher liquidity preference is crucial to this process. Here we estimate the effect of liquidity preference and other financial variables on the number of Brazilian states' patents, in order to gauge the importance of the bank system to technological progress and regional development.

Suggested Citation

  • João Prates Romero & Frederico G. Jayme, 2012. "Financial System, Innovation and Regional Development: The Relationship between Liquidity Preference and Innovation in Brazil," Review of Political Economy, Taylor & Francis Journals, vol. 24(4), pages 623-642, October.
  • Handle: RePEc:taf:revpoe:v:24:y:2012:i:4:p:623-642
    DOI: 10.1080/09538259.2012.729934

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