Financial Structure and Firm Innovation: Evidence from around the World

Davide Salvatore Mare, Francesca de Nicola and Faruk Miguel Liriano

No 9670, Policy Research Working Paper Series from The World Bank

Abstract: This paper analyzes the relationship between financial structure and innovation. Analysis of cross-country micro data over 2009–18 shows that a firm’s financial sources matter for the choice to innovate and the extent to which a firm innovates. The relationship is stronger for firms relying on non-bank financial intermediaries and for firms in low-technology sectors. Moreover, the use of external sources of finance is associated with improved prospects of innovation, especially in more financially developed countries. These findings suggest that developing the financial sector can bring benefits in terms of innovation.

Keywords: Financial Sector Policy; Innovation; Textiles; Apparel&Leather Industry; Pulp&Paper Industry; Plastics&Rubber Industry; Food&Beverage Industry; Common Carriers Industry; Construction Industry; Business Cycles and Stabilization Policies; General Manufacturing; Labor Markets; Financial Economics; Finance and Development (search for similar items in EconPapers)
Date: 2021-05-24
New Economics Papers: this item is included in nep-cfn, nep-fdg and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:9670

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