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Financial stability, competitiveness and banks' innovation capacity: Evidence from the Global Financial Crisis

Marta Degl'Innocenti, Kevin Grant, Aleksandar Šević and Nickolaos Tzeremes ()

International Review of Financial Analysis, 2018, vol. 59, issue C, 35-46

Abstract: This paper provides nuanced evidence on the effect of competitiveness and financial stability on banks' innovation-capacity (technological-change) levels during the Global Financial Crisis (GFC) in 2007–2008. We applied contemporary developments in non-parametric frontier analysis, employing a new index, the Global Financial Centres Index, to measure the business competitiveness of 45 financial centres. Our findings indicated a nonlinear and positive relationship between financial centres' competitiveness, banks' stability and innovation-capacity levels. This suggests that banks' ability to increase stability alongside financial centres' stability in a highly competitive environment acts as a protective measure against the GFC's negative effects.

Keywords: Global Financial Crisis; Financial centres; Innovation capacity; Non-parametric frontier analysis (search for similar items in EconPapers)
JEL-codes: G21 D24 C14 O16 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:finana:v:59:y:2018:i:c:p:35-46