Innovation, Information, and Financial Architecture

Solomon A. Tadesse ()

Journal of Financial and Quantitative Analysis, 2006, vol. 41, issue 04, pages 753-786

Abstract: Does a financial system architecture anchored on banks perform better than one centered on markets in fostering technological innovations as engines of growth? In a panel of industrial sectors across a large cross section of countries, I find that while market-based systems have a general positive effect on innovations in all economic sectors, bank-based systems foster more rapid technological progress in more information-intensive industrial sectors, suggesting a heterogeneous impact of financial architecture. Thus, the relative performance of bank-based systems vis- -vis market-based systems depends on the industrial structure of the economy.

Date: 2006

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Working Paper: Innovation, Information and Financial Architecture (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:cup:jfinqa:v:41:y:2006:i:04:p:753-786_00

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