BANKING DEVELOPMENT AND CORPORATE INNOVATION
DOI:
https://doi.org/10.54695/bmi.170.4793Keywords:
Banking development, Innovation, R&D investment, Patents, Governance.Abstract
This paper investigates the impact of banking development on corporate innovation.Using data from the listed French companies on the SBF 120, we present evidence that bank geographical proximity is no longer determinant in access to R&D financing. However, an efficient and performing banking sector that finance the economy through credits to firms seems to encourage firms to invest in R&D.
We find that the probability that R&D investments result in new patents seems to be more affected by corporate governance rather than by banking development. Results show no empirical evidence on a greater impact of banking development on corporate innovation for firms that are more dependent upon external finance. In this case, the equity market development becomes the driving factor of R&D financing and the corporate governance remains the fundamental determinant of transforming R&D investments on new patents.
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