IDEAS home Printed from https://ideas.repec.org/p/fip/fedpwp/08-10.html
   My bibliography  Save this paper

Business method patents and U.S. financial services

Author

Listed:
  • Robert M. Hunt

Abstract

A decade after the State Street decision, more than 1,000 business method patents are granted each year. Yet only one in ten are obtained by a financial institution. Most business method patents are also software patents. ; Have these patents increased innovation in financial services? To address this question the author constructs new indicators of R&D intensity based on the occupational composition of financial industries. The financial sector appears more research intensive than official statistics would suggest but less than the private economy taken as a whole. There is considerable variation across industries but little apparent trend. There does not appear to be an obvious effect from business method patents on the sector’s research intensity. ; This working paper supersedes Working Paper No. 07-21 and Payment Cards Center Discussion Paper No. 07-10 ; Also issued as Payment Cards Center Discussion Paper No. 08-05

Suggested Citation

  • Robert M. Hunt, 2008. "Business method patents and U.S. financial services," Working Papers 08-10, Federal Reserve Bank of Philadelphia.
  • Handle: RePEc:fip:fedpwp:08-10
    as

    Download full text from publisher

    File URL: http://www.philadelphiafed.org/research-and-data/publications/working-papers//2008/wp08-10.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bronwyn H. Hall & Stuart Graham & Dietmar Harhoff & David C. Mowery, 2004. "Prospects for Improving U.S. Patent Quality via Postgrant Opposition," NBER Chapters,in: Innovation Policy and the Economy, Volume 4, pages 115-144 National Bureau of Economic Research, Inc.
    2. James Bessen & Robert M. Hunt, 2007. "An Empirical Look at Software Patents," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(1), pages 157-189, March.
    3. James Bessen & Michael J. Meurer, 2008. "Introduction to Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk," Introductory Chapters,in: Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk Princeton University Press.
    4. W. Scott Frame & Lawrence J. White, 2004. "Empirical Studies of Financial Innovation: Lots of Talk, Little Action?," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 116-144, March.
    5. Marco Pagano, 1989. "Trading Volume and Asset Liquidity," The Quarterly Journal of Economics, Oxford University Press, vol. 104(2), pages 255-274.
    6. Berger, Allen N. & Mester, Loretta J., 2003. "Explaining the dramatic changes in performance of US banks: technological change, deregulation, and dynamic changes in competition," Journal of Financial Intermediation, Elsevier, vol. 12(1), pages 57-95, January.
    7. Robert M. Hunt, 2004. "Patentability, Industry Structure, and Innovation," Journal of Industrial Economics, Wiley Blackwell, vol. 52(3), pages 401-425, September.
    8. Farrell, Joseph & Klemperer, Paul, 2007. "Coordination and Lock-In: Competition with Switching Costs and Network Effects," Handbook of Industrial Organization, Elsevier.
    9. Tufano, Peter, 1989. "Financial innovation and first-mover advantages," Journal of Financial Economics, Elsevier, vol. 25(2), pages 213-240, December.
    10. Anderson, Ronald W & Harris, Christopher J, 1986. "A Model of Innovation with Application to New Financial Products," Oxford Economic Papers, Oxford University Press, vol. 38(0), pages 203-218, Suppl. No.
    11. Stefan Wagner, 2008. "Business Method Patents In Europe And Their Strategic Use—Evidence From Franking Device Manufacturers," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 17(3), pages 173-194.
    12. Robert M. Hunt, 2006. "When Do More Patents Reduce R&D?," American Economic Review, American Economic Association, vol. 96(2), pages 87-91, May.
    13. Berger, Allen N, 2003. " The Economic Effects of Technological Progress: Evidence from the Banking Industry," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(2), pages 141-176, April.
    14. Chou, T. & Haller, H.H., 1995. "The Division of Profit in Sequential Innovation Reconsidered," Discussion Paper 1995-64, Tilburg University, Center for Economic Research.
    15. Lemley, Mark A & Shapiro, Carl, 2007. "Patent Hold-Up and Royalty Stacking," Competition Policy Center, Working Paper Series qt8638s257, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
    16. Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2000. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)," NBER Working Papers 7552, National Bureau of Economic Research, Inc.
    17. Hunt Robert M., 2003. "An Introduction to the Economics of Payment Card Networks," Review of Network Economics, De Gruyter, vol. 2(2), pages 1-17, June.
    18. James J. McAndrews & Chris Stefanadis, 2000. "The emergence of electronic communications networks in the U.S. equity markets," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 6(Oct).
    19. Edwin Mansfield, 1986. "Patents and Innovation: An Empirical Study," Management Science, INFORMS, vol. 32(2), pages 173-181, February.
    20. GianCarlo Moschini & Oleg Yerokhin, 2008. "Patents, Research Exemption, and the Incentive for Sequential Innovation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(2), pages 379-412, June.
    21. Bhattacharyya, Sugato & Nanda, Vikram, 2000. "Client Discretion, Switching Costs, and Financial Innovation," Review of Financial Studies, Society for Financial Studies, vol. 13(4), pages 1101-1127.
    22. Robert M. Hunt & Samuli Simojoki & Tuomus Takalo, 2009. "Intellectual Property Rights and Standard Setting in Financial Services: The Case of the Single European Payments Area," Chapters,in: Financial Innovation in Retail and Corporate Banking, chapter 7 Edward Elgar Publishing.
    23. William L. Silber, 1981. "Innovation, competition, and new contract design in futures markets," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 1(2), pages 123-155, June.
    24. Farrell, Joseph & Klemperer, Paul, 2007. "Coordination and Lock-In: Competition with Switching Costs and Network Effects," Handbook of Industrial Organization, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hyunbae Chun & M. Ishaq Nadiri, 2016. "Intangible Investment and Changing Sources of Growth in Korea," The Japanese Economic Review, Japanese Economic Association, vol. 67(1), pages 50-76, March.
    2. Bronwyn H. Hall, 2009. "Business And Financial Method Patents, Innovation, And Policy," Scottish Journal of Political Economy, Scottish Economic Society, vol. 56(s1), pages 443-473, September.
    3. Awrey, Dan, 2013. "Toward a supply-side theory of financial innovation," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 401-419.
    4. Komulainen, Mari & Takalo, Tuomas, 2009. "Does State Street lead to Europe? : The case of financial exchange innovations," Research Discussion Papers 22/2009, Bank of Finland.

    More about this item

    Keywords

    Patents ; Financial services industry;

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedpwp:08-10. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Beth Paul). General contact details of provider: http://edirc.repec.org/data/frbphus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.