IDEAS home Printed from https://ideas.repec.org/p/smo/jpaper/02am.html
   My bibliography  Save this paper

Financial Systems and Private Innovation Activity. A Research for OECD Countries

Author

Listed:
  • Alberto Mendez-Morales

    (Universidad Militar Nueva Granada)

  • Carlos Yanes-Guerra

    (Universidad Militar Nueva Granada)

Abstract

This research shows the effect that financial markets development has on R and D private investment of OECD countries. The main porpoise of this research is to help policy makers to generate effective policies to spur innovation, especially in underdeveloped countries. Data used on this research comes from World Bank and Unesco for the period 2000-2016. Used methodology is a dynamic panel data in which macroeconomic, financial, innovation and structural variables are included. It was found that stock markets development is positively related with private expenditure on R and D, but bond markets are negatively related with it. Simultaneously, low inflation and stable exchange rates are positively related with R and D. This is a novel research given that we show that an effective innovation policy for private firms, should be accompanied of policies aimed to deepening financial markets as a way to spur investments on R and D.

Suggested Citation

  • Alberto Mendez-Morales & Carlos Yanes-Guerra, 2018. "Financial Systems and Private Innovation Activity. A Research for OECD Countries," Proceedings of the 11th International RAIS Conference, November 19-20, 2018 02AM, Research Association for Interdisciplinary Studies.
    • Handle: RePEc:smo:jpaper:02am
    as

    Download full text from publisher

    File URL: http://rais.education/wp-content/uploads/2018/11/02AM.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Czarnitzki, Dirk & Lopes-Bento, Cindy, 2013. "Value for money? New microeconometric evidence on public R&D grants in Flanders," Research Policy, Elsevier, vol. 42(1), pages 76-89.
    2. Acharya, Viral & Xu, Zhaoxia, 2017. "Financial dependence and innovation: The case of public versus private firms," Journal of Financial Economics, Elsevier, vol. 124(2), pages 223-243.
    3. Daniel Chudnovsky & Andrés López & Martín Rossi & Diego Ubfal, 2006. "Evaluating a Program of Public Funding of Private Innovation Activities: An Econometric Study of FONTAR in Argentina," IDB Publications (Working Papers) 27158, Inter-American Development Bank.
    4. G. M.P. Swann, 2009. "The Economics of Innovation," Books, Edward Elgar Publishing, number 13211.
    5. Daniel Chudnovsky & Andrés López & Martín Rossi & Diego Ubfal, 2006. "Evaluating A Program of Public Funding of Private Innovation Activities. An Econometric Study of FONTAR in Argentina," OVE Working Papers 1606, Inter-American Development Bank, Office of Evaluation and Oversight (OVE).
    6. Freeman, Chris, 1995. "The 'National System of Innovation' in Historical Perspective," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 19(1), pages 5-24, February.
    7. Hall, Bronwyn H. & Lerner, Josh, 2010. "The Financing of R&D and Innovation," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 609-639, Elsevier.
    8. Hsu, Po-Hsuan & Tian, Xuan & Xu, Yan, 2014. "Financial development and innovation: Cross-country evidence," Journal of Financial Economics, Elsevier, vol. 112(1), pages 116-135.
    9. James R. Brown & Steven M. Fazzari & Bruce C. Petersen, 2009. "Financing Innovation and Growth: Cash Flow, External Equity, and the 1990s R&D Boom," Journal of Finance, American Finance Association, vol. 64(1), pages 151-185, February.
    10. Arellano, Manuel, 2003. "Panel Data Econometrics," OUP Catalogue, Oxford University Press, number 9780199245291.
    11. Richard R. Nelson, 1959. "The Simple Economics of Basic Scientific Research," Journal of Political Economy, University of Chicago Press, vol. 67(3), pages 297-297.
    12. Marco Da Rin & María Fabiana Penas, 2007. "The Effect of Venture Capital on Innovation Strategies," NBER Working Papers 13636, National Bureau of Economic Research, Inc.
    13. Amemiya, Takeshi, 1971. "The Estimation of the Variances in a Variance-Components Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 12(1), pages 1-13, February.
    14. Aerts, Kris & Czarnitzki, Dirk, 2004. "Using Innovation Survey Data to Evaluate R&D Policy: The Case of Belgium," ZEW Discussion Papers 04-55, ZEW - Leibniz Centre for European Economic Research.
    15. Lain-Tze Tee & Soo-Wah Low & Si-Roei Kew & Noor A. Ghazali, 2014. "Financial Development and Innovation Activity: Evidence from Selected East Asian Countries," Prague Economic Papers, Prague University of Economics and Business, vol. 2014(2), pages 162-180.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Szczygielski, Krzysztof & Grabowski, Wojciech & Pamukcu, Mehmet Teoman & Tandogan, Vedat Sinan, 2017. "Does government support for private innovation matter? Firm-level evidence from two catching-up countries," Research Policy, Elsevier, vol. 46(1), pages 219-237.
    2. Bettina Becker, 2013. "The Determinants of R&D Investment: A Survey of the Empirical Research," Discussion Paper Series 2013_09, Department of Economics, Loughborough University, revised Sep 2013.
    3. Yang, Bao & Chou, Hsin-I. & Zhao, Jing, 2020. "Innovation or dividend payout: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 68(C), pages 180-203.
    4. repec:idb:brikps:460 is not listed on IDEAS
    5. Hall, Bronwyn H. & Lerner, Josh, 2010. "The Financing of R&D and Innovation," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 609-639, Elsevier.
    6. Liu, Duan & Zhou, Qianzhen & Chen, Shiqi & Wan, Hong & He, Hongbo, 2021. "Capital market access and innovation efficiency: A natural experiment from China’s pilot VAT reform in 2012," International Review of Economics & Finance, Elsevier, vol. 71(C), pages 549-566.
    7. Michel Dumont, 2015. "Working Paper 05-15 - Evaluation of federal tax incentives for private R&D in Belgium: An update," Working Papers 1505, Federal Planning Bureau, Belgium.
    8. Ugur, Mehmet & Trushin, Eshref & Solomon, Edna, 2015. "UK and EU subsidies and private R&D investment: Is there input additionality?," MPRA Paper 68009, University Library of Munich, Germany, revised 16 Nov 2015.
    9. Zhang, Ping & Wang, Yiru & Gao, Jieying, 2023. "Going public and innovation: Evidence from the ChiNext stock market," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 586-613.
    10. Nadine Levratto & Aurelien Quignon, 2021. "Innovation Performance and the Signal Effect: Evidence from a European Program," Working Papers halshs-03466903, HAL.
    11. Giovanni Cerulli & Bianca Poti', 2016. "Explaining firm sensitivity to R&D subsidies within a dose-response model: The role of financial constraints, real cost of investment, and strategic value of R&D," DEM Working Papers 2016/09, Department of Economics and Management.
    12. Ramana Nanda & William R. Kerr, 2015. "Financing Innovation," Annual Review of Financial Economics, Annual Reviews, vol. 7(1), pages 445-462, December.
    13. Francesco Aiello & Graziella Bonanno & Stefania Patrizia Sonia Rossi, 2019. "Risk Aversion And Entrepreneurship: Financing Innovation For Smes Across Europe. Evidence From Multilevel Models," Working Papers 201902, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    14. Alessandro Saia & Dan Andrews & Silvia Albrizio, 2015. "Productivity Spillovers from the Global Frontier and Public Policy: Industry-Level Evidence," OECD Economics Department Working Papers 1238, OECD Publishing.
    15. Mao, Yifei, 2021. "Managing innovation: The role of collateral," Journal of Accounting and Economics, Elsevier, vol. 72(1).
    16. Pang, Caiji & Wang, Ying, 2020. "Stock pledge, risk of losing control and corporate innovation," Journal of Corporate Finance, Elsevier, vol. 60(C).
    17. Aurélien Quignon & Nadine Levratto, 2021. "Innovation Performance and the Signal Effect: Evidence from a European Program," EconomiX Working Papers 2021-34, University of Paris Nanterre, EconomiX.
    18. Crespi, Gustavo & Giuliodori, David & Giuliodori, Roberto & Rodriguez, Alejandro, 2016. "The effectiveness of tax incentives for R&D+i in developing countries: The case of Argentina," Research Policy, Elsevier, vol. 45(10), pages 2023-2035.
    19. Wojciech Grabowski & Teoman Pamukcu & Krzysztof Szczygielski & Sinan Tandogan, 2013. "Does Government Support for Private Innovation Matter? Firm-Level Evidence from Turkey and Poland," CASE Network Studies and Analyses 0458, CASE-Center for Social and Economic Research.
    20. Qureshi, Irfan & Park, Donghyun & Crespi, Gustavo Atilio & Benavente, Jose Miguel, 2021. "Trends and determinants of innovation in Asia and the Pacific vs. Latin America and the Caribbean," Journal of Policy Modeling, Elsevier, vol. 43(6), pages 1287-1309.
    21. Çağatay Bircan & Ralph De Haas, 2020. "The Limits of Lending? Banks and Technology Adoption across Russia," The Review of Financial Studies, Society for Financial Studies, vol. 33(2), pages 536-609.

    More about this item

    Keywords

    Financial systems; stock markets; credit markets; R and D; innovation;
    All these keywords.

    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:smo:jpaper:02am. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Eduard David (email available below). General contact details of provider: http://rais.education/ .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.