Informed finance and technological change: Evidence from credit relationships

Ana Maria Herrera, Raoul Minetti

Research output: Contribution to journalArticlepeer-review

127 Scopus citations


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 languageEnglish
Pages (from-to)223-269
Number of pages47
JournalJournal of Financial Economics
Issue number1
StatePublished - Jan 1 2007


  • Banks
  • Credit relationships
  • Technological change

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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