Banks and Innovation: Microeconometric Evidence on Italian Firms

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

No 2032, IZA Discussion Papers from Institute for the Study of Labor (IZA)

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.

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-cba, nep-eec, nep-ent, nep-fin, nep-fmk, nep-ino, nep-mic and nep-tid
Date: 2006-03
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Related works:
Working Paper: Banks and Innovation: Microeconometric Evidence on Italian Firms (2007)
Journal Article: Banks and innovation: Microeconometric evidence on Italian firms (2008)
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