Banks and Innovation: Microeconometric Evidence on Italian Firms

43 Pages Posted: 16 Nov 2005

See all articles by Luigi Benfratello

Luigi Benfratello

University of Turin - Department of Economics and Financial Sciences G. Prato; CERIS-CNR

Fabio Schiantarelli

Boston College - Department of Economics; IZA Institute of Labor Economics

Alessandro Sembenelli

University of Turin - Department of Economics and Financial Sciences G. Prato

Date Written: March 2006

Abstract

In this paper we investigate the effect of local banking development on firms' innovative activities, using a rich data set on innovation for a large number of Italian firms over the 1990's. There is evidence that banking development affects the probability of process innovation, particularly for small firms and for firms in high(er) tech sectors and in sectors more dependent upon external finance. The evidence for product innovation is weaker. There is also some evidence that banking development reduces the cash flow sensitivity of fixed investment spending, particularly for small firms, and that it increases the probability they will engage in R&D.

Keywords: Banks, Financial Development, Innovation, R&D, Investment

JEL Classification: D24, G21, G38, O31, O33

Suggested Citation

Benfratello, Luigi and Schiantarelli, Fabio and Sembenelli, Alessandro, Banks and Innovation: Microeconometric Evidence on Italian Firms (March 2006). IZA Discussion Paper No. 2032, Available at SSRN: https://ssrn.com/abstract=848950 or http://dx.doi.org/10.2139/ssrn.848950

Luigi Benfratello

University of Turin - Department of Economics and Financial Sciences G. Prato ( email )

C. so Unione Sovietica, 218 Bis
Torino, 13820-4020
Italy
+39 011 6706072 (Phone)
+39 011 6706062 (Fax)

CERIS-CNR ( email )

Italy

Fabio Schiantarelli (Contact Author)

Boston College - Department of Economics ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States
617-552-4512 (Phone)
617-552-2308 (Fax)

HOME PAGE: http://https://sites.google.com/a/bc.edu/fabio-schiantarelli/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Alessandro Sembenelli

University of Turin - Department of Economics and Financial Sciences G. Prato ( email )

C. so Unione Sovietica, 218 Bis
Torino, 13820-4020
Italy
+39 011 670 6059 (Phone)
+39 011 670 6062 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
252
Abstract Views
2,029
rank
168,372
PlumX Metrics