Bank Regulation, Lending and Patenting: Evidence from the EBA Capital Exercise

29 Pages Posted: 10 Dec 2021

See all articles by Jan Krzyzanowski

Jan Krzyzanowski

Goethe University Frankfurt

Uwe Walz

Goethe University Frankfurt - Institute of Economics; Leibniz Institute for Financial Research SAFE

Date Written: December 7, 2021

Abstract

We analyze the impact of decreases in available lending resources on quantitative and qualita- tive dimensions of firms’ patenting activities. We thereby make use of the European Banking Authority?s capital exercise to carve out the causal effect of bank lending on firm innovation. In order to do so we combine various datasets to derive information on firms’ financials, their patenting behaviors, as well as their relationships with their lenders. Building on this self- generated dataset, we provide support for the “less finance, less innovation” view. At the same time, we show that lower available financial resources for firms lead to improvement in the qualitative dimensions of their patents. Hence, we carve out a “less finance, less but better innovation” pattern.

Keywords: financing, bank lending, patents

JEL Classification: D22, G30, G31, G38, N24, O31, O34

Suggested Citation

Krzyzanowski, Jan and Walz, Uwe, Bank Regulation, Lending and Patenting: Evidence from the EBA Capital Exercise (December 7, 2021). SAFE Working Paper No. 330, Available at SSRN: https://ssrn.com/abstract=3979770 or http://dx.doi.org/10.2139/ssrn.3979770

Jan Krzyzanowski

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Uwe Walz (Contact Author)

Goethe University Frankfurt - Institute of Economics ( email )

Postfach 81
D-60054 Frankfurt
Germany

Leibniz Institute for Financial Research SAFE ( email )

(http://www.safe-frankfurt.de)
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

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