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Bank Size or Distance: What Hampers Innovation Adoption by SMEs?

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  • Pietro Alessandrini

    () (Universit… Politecnica delle Marche, MoFiR)

  • Andrea Filippo Presbitero

    () (Universit… Politecnica delle Marche, MoFiR)

  • Alberto Zazzaro

    () (Universit… Politecnica delle Marche, MoFiR)

Abstract

A growing body of research is focusing on banking organizational issues, emphasizing the difficulties encountered by hierarchically organized banks in lending to informationally opaque borrowers. While the two extreme cases of hierarchical and non{hierarchical organizations are typically contrasted, what shapes the degree of hierarchy and how to measure it remain fairly vague. In this paper we compare bank size and distance between a bank's branches and headquarter as possible sources of organizational frictions, by studying their impact on small rms' likelihood of introducing innovations. Results show that SMEs located in provinces where the local banking system is functionally distant are less inclined to introduce innovations, while the market share of large banks is only slightly correlated with rms' propensity to innovate.

Suggested Citation

  • Pietro Alessandrini & Andrea Filippo Presbitero & Alberto Zazzaro, 2008. "Bank Size or Distance: What Hampers Innovation Adoption by SMEs?," Mo.Fi.R. Working Papers 2, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  • Handle: RePEc:anc:wmofir:2
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    Keywords

    Bank size; Functional distance; Innovation; SMEs;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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