Informed Finance and Technological Change: Evidence from Credit Relationships
48 Pages Posted: 4 May 2004
Date Written: April 2004
Abstract
This paper empirically investigates the effect of "informed finance" on technological change. We argue that the theoretical literature offers conflicting predictions on whether the information of financiers fosters or impedes firms' innovation. Using data from a sample of Italian manufacturing firms, we find that the information of firms' main banks, proxied by the duration of credit relationships, fosters innovation. We also find some evidence that this positive effect is economically and statistically more significant for product than for process innovations. The latter result may signal that the alleged tight secrecy of process innovations exacerbates the negative effects of banks' information on innovation.
JEL Classification: G21, O30
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Relationship Lending and Lines of Credit in Small Firm Finance
By Allen N. Berger and Gregory F. Udell
-
Lines of Credit and Relationship Lending in Small Firm Finance
By Allen N. Berger and Gregory F. Udell
-
Information Production and Capital Allocation: Decentralized vs. Hierarchical Firms
-
Information Production and Capital Allocation: Decentralized vs. Hierarchical Firms
-
Does Distance Still Matter? The Information Revolution in Small Business Lending
-
Does Distance Still Matter? The Information Revolution in Small Business Lending
-
By Allen N. Berger, Philip E. Strahan, ...
-
By Allen N. Berger, Nathan Miller, ...
-
By Allen N. Berger, Nathan Miller, ...
-
By Allen N. Berger and Gregory F. Udell