Finance and Innovation System or Chaos

Jesper Christensen and Ina Drejer

No 98-24, DRUID Working Papers from DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies

Abstract: The present paper discusses an important part of the framework conditions for innovation in a number of European countries (France, Italy, Spain, the Netherlands, the United Kingdom) as well Japan and the United States through a comparison of the development of the financial systems in these countries. The main focus is whether a convergence can be observed between what is traditionally perceived as market based and credit based systems respectively. Based on quantitative statistics it is concluded that a convergence has taken place, and it is becoming increasingly more difficult to divide national financial systems into two main categories based on quantitative data alone. But differences still remain, and the paper continues by discussing reasons for convergence and divergence respectively. These reasons include internationalization, differences in industrial structure, as well as changes in national and international regulation. Before turning to a discussion of the policy perspectives of the observed development the paper discusses the financial systems ability to finance different types of transactions.

Keywords: Financial systems; innovation financing; economic integration and convergence (search for similar items in EconPapers)
JEL-codes: G20 O31 P51 (search for similar items in EconPapers)
Date: 1998
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Citations: View citations in EconPapers (5)

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