Did bank distress stifle innovation during the Great Depression?

Ramana Nanda and Tom Nicholas

Journal of Financial Economics, 2014, vol. 114, issue 2, 273-292

Abstract: We find a negative relationship between bank distress and the level, quality and trajectory of firm-level innovation during the Great Depression, particularly for R&D firms operating in capital intensive industries. However, we also show that because a sufficient number of R&D intensive firms were located in counties with lower levels of bank distress, or were operating in less capital intensive industries, the negative effects were mitigated in aggregate. Although Depression era bank distress was associated with the stifling of innovation, our results also help to explain why technological development was still robust following one of the largest shocks in the history of the U.S. banking system.

Keywords: Great Depression; Patents; R&D; Bank distress (search for similar items in EconPapers)
JEL-codes: G21 N22 O30 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (91)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304405X14001536
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Did Bank Distress Stifle Innovation During the Great Depression? (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:114:y:2014:i:2:p:273-292

DOI: 10.1016/j.jfineco.2014.07.006

Access Statistics for this article

Journal of Financial Economics is currently edited by G. William Schwert

More articles in Journal of Financial Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().