Innovation, Credit Constraints and National Banking Systems: A Comparison of Developing Nations

Edward Lorenz and Sophie Pommet

No 2017-16, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France

Abstract: In that paper, we seek to extend exiting micro-level studies on the financing decisions of enterprises in developing countries by explicitly connecting these decisions to firms’ innovation outcomes and to the wider institutional framework formed by the national banking system. Indeed, the national banking system is recognized as being central to the ability of developing-country firms to acquire the resources and develop the capabilities needed for innovation. We investigate the links between innovation and financial system characteristics for a sample of 36 developing nations spread across 5 regions of the world: Sub-Saharan Africa, the Middle East and North Africa, East Asia and Pacific, South Asia and Central Asia. Our results show that credit constraints have a significant negative impact on innovation and that the characteristics of the national banking system indirectly affect innovation through their impact on the likelihood that firms face these financing constraints.

Keywords: Financing Constraints; Innovation; Banking System; Developing Nations (search for similar items in EconPapers)
JEL-codes: G2 O16 O3 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2017-05
New Economics Papers: this item is included in nep-cse and nep-ino
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:gre:wpaper:2017-16

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