Financial System and Innovations-Determinants of Early Stage Venture Capital in Europe

Christian Schröder

No sdp09004, Schumpeter Discussion Papers from Universitätsbibliothek Wuppertal, University Library

Abstract: This paper highlights the role of financial development in producing innovative products and services. After a general overview of the function of the financial structure as well as financial development in realizing product and service innovations, this work examines a financial intermediary which is particularly specialized to finance high-tech innovations - the venture capitalist (VC). We employ a panel analysis to illustrate whether technical opportunities, taxes, stock market development, relative size of the banking sector, GDP growth and laterstage venture capital influence early stage venture capital investments. The empirical analysis was conducted in 15 European countries and looked at the period from 1995 to 2005. The results show that technical opportunities, size of the stock market and banking sector, interest rate growth and the amount of later-stage venture capital have a significant positive and corporate tax rate a negative impact on the amount of early s tage risk capital. The structure of the national financial system seems not to have a significant influence.

Keywords: Early Stage Venture Capital; Risk Capital; Financial System; Financing Innovations (search for similar items in EconPapers)
JEL-codes: G23 (search for similar items in EconPapers)
Pages: 33
Date: 2009-03
New Economics Papers: this item is included in nep-eec and nep-ent
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Financial System and Innovations: Determinants of Early Stage Venture Capital in Europe (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:bwu:schdps:sdp09004

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