Informed finance and technological change: Evidence from credit relationships

Ana Maria Herrera; Raoul Minetti

doi:10.1016/j.jfineco.2005.12.001

Informed finance and technological change: Evidence from credit relationships

Ana Maria Herrera, Raoul Minetti

Economics

Research output: Contribution to journal › Article › peer-review

117 Citations (SciVal)

Abstract

This paper empirically investigates the effect of "informed finance" on technological change. The theoretical literature offers conflicting predictions on whether the information of financiers fosters or inhibits 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, promotes innovation. This positive effect is economically and statistically more significant for product than for process innovations. Nonetheless, the role of relationship banks in innovation is quite unsophisticated: they do not foster internal research but rather fund the relevant investments that the introduction and acquisition of new technologies entails.

Original language	English
Pages (from-to)	223-269
Number of pages	47
Journal	Journal of Financial Economics
Volume	83
Issue number	1
DOIs	https://doi.org/10.1016/j.jfineco.2005.12.001
State	Published - Jan 1 2007

Keywords

Banks
Credit relationships
Technological change

ASJC Scopus subject areas

Accounting
Finance
Economics and Econometrics
Strategy and Management

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10.1016/j.jfineco.2005.12.001

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Informed finance and technological change: Evidence from credit relationships

Abstract

Keywords

ASJC Scopus subject areas

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