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Title:Banks and innovation: microeconometric evidence on Italian firms PDF Logo
Authors:Benfratello, Luigi
Schiantarelli, Fabio
Sembenelli, Alessandro
Issue Date:2006
Series/Report no.:IZA Discussion Papers 2032
Abstract:In this paper we investigate the effect of local banking development on firms' innovative activities, using a rich data set on innovation for a large number of Italian firms over the 1990's. There is evidence that banking development affects the probability of process innovation, particularly for small firms and for firms in high(er) tech sectors and in sectors more dependent upon external finance. The evidence for product innovation is weaker. There is also some evidence that banking development reduces the cash flow sensitivity of fixed investment spending, particularly for small firms, and that it increases the probability they will engage in R&D.
Subjects:banks
financial development
innovation
R&D
investment
JEL:D24
G21
G38
O31
O33
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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