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Financing innovation: The role of patent examination

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  • Billington, Stephen D.
  • Colvin, Christopher L.
  • Coyle, Christopher

Abstract

How does patent examination influence access to finance for innovative firms? We exploit a reform to the UK's patent system that introduced substantive examination to the patent application process, improving the information available to potential investors on the value of firms' patents. Using a newly compiled firm-level dataset of exchange-listed corporations, we find that firms holding examined patents were able to borrow more, reflecting improved access to capital markets, and leading to firm growth. Our results highlight the role of patent examination in reducing information asymmetries, enhancing the signalling value of patents, and mitigating financial barriers to innovation.

Suggested Citation

  • Billington, Stephen D. & Colvin, Christopher L. & Coyle, Christopher, 2025. "Financing innovation: The role of patent examination," QUCEH Working Paper Series 25-01, Queen's University Belfast, Queen's University Centre for Economic History.
    • Handle: RePEc:zbw:qucehw:309427
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    Keywords

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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
    • N43 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: Pre-1913
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • 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

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