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Finance and Innovation System or Chaos

  • Jesper Lindgaard Christensen
  • Ina Drejer

The present paper discusses an important part of the framework conditions for innovation in a number of European countries (France, Italy, Spain, the Netherlands, the United Kingdom) as well Japan and the United States through a comparison of the development of the financial systems in these countries. The main focus is whether a convergence can be observed between what is traditionally perceived as market based and credit based systems respectively. Based on quantitative statistics it is concluded that a convergence has taken place, and it is becoming increasingly more difficult to divide national financial systems into two main categories based on quantitative data alone. But differences still remain, and the paper continues by discussing reasons for convergence and divergence respectively. These reasons include internationalization, differences in industrial structure, as well as changes in national and international regulation. Before turning to a discussion of the policy perspectives of the observed development the paper discusses the financial systems ability to finance different types of transactions.

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Paper provided by DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies in its series DRUID Working Papers with number 98-24.

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Date of creation: 1998
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Handle: RePEc:aal:abbswp:98-24
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  1. Dosi, Giovanni, 1990. "Finance, innovation and industrial change," Journal of Economic Behavior & Organization, Elsevier, vol. 13(3), pages 299-319, June.
  2. Colin Mayer, 1990. "Financial Systems, Corporate Finance, and Economic Development," NBER Chapters, in: Asymmetric Information, Corporate Finance, and Investment, pages 307-332 National Bureau of Economic Research, Inc.
  3. Mayer, Colin, 1988. "New issues in corporate finance," European Economic Review, Elsevier, vol. 32(5), pages 1167-1183, June.
  4. Vitols, Sigurt, 1995. "Financial systems and industrial policy in Germany and Great Britain: the limits of convergence," Discussion Papers, Research Unit: Economic Change and Employment FS I 95-311, Social Science Research Center Berlin (WZB).
  5. Williamson, Oliver E, 1988. " Corporate Finance and Corporate Governance," Journal of Finance, American Finance Association, vol. 43(3), pages 567-91, July.
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