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Credit Supply and Corporate Innovation

Authors Mario, Daniele Amore
Cedric, Schneider
Alminas, Zaldokas View this author's profile
Issue Date 2013
Source Journal of Financial Economics , v.109,(3), September 2013, p. 835-855
Summary We present evidence that banking development plays a key role in technological progress. We focus on manufacturing firms' innovative performance, measured by patent-based metrics, and employ exogenous variations in banking development arising from the staggered deregulation of banking activities across US states during the 1980s and 1990s. We find that interstate banking deregulation had significant beneficial effects on the quantity and quality of innovation activities, especially for firms highly dependent on external capital and located closer to entering banks. Furthermore, we find that these results are strongly driven by a greater ability of deregulated banks to geographically diversify credit risk. © 2013 Elsevier B.V.
ISSN 0304-405X
Language English
Format Article
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