Innovation, Information and Financial Architecture

Solomon A. Tadesse ()

No wp877, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan Stephen M. Ross Business School

Abstract: Does a financial system architecture anchored on banks better than one centered on markets in fostering technological innovations as engine 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 informationintensive industrial sectors, suggesting a heterogeneous impact of financial architecture. Thus, the relative performance of bank-based systems vis-à-vis market-based systems depends on the industrial structure of the economy.

Keywords: Technological Progress; Innovation; Intangible Assets; Financial System Architecture; Bank-Based System; Market-Based System (search for similar items in EconPapers)
JEL-codes: G1 G21 G32 E44 O14 O31 O34 O4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-ino and nep-mac
Date: Written 2007-06-01

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