Banks and Innovation: Microeconometric Evidence on Italian Firms

Luigi Benfratello (), Fabio Schiantarelli () and Alessandro Sembenelli ()

No 631, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: This paper contains a detailed empirical investigation of the effect of local banking development on firms' innovative activities, using a rich data set on innovation at the firm level for a large number of Italian firms over the 90'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. 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.

Keywords: Banks; Financial Development; Innovation; R&D; Investment (search for similar items in EconPapers)
JEL-codes: D24 G21 G38 O31 O33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn, nep-ent, nep-fin, nep-fmk, nep-ino, nep-mic and nep-tid
Date: 2005-10-30, Revised 2007-06-13
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Related works:
Working Paper: Banks and Innovation: Microeconometric Evidence on Italian Firms (2006)
Journal Article: Banks and innovation: Microeconometric evidence on Italian firms (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:boc:bocoec:631

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