Does financial development promotes innovation in developing economies? An Empirical Analysis

Using firm-level data from 2006 to 2013 for a set of developing countries, we examine the effects of financial development on innovation. Financial development boosts innovation by improving resource allocation and investment toward strategic sectors as well as facilitating technology to promote gro...

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Autores:
Aristizabal, María
Botero, Maria
Canavire, Gustavo
Tipo de recurso:
Fecha de publicación:
2015
Institución:
Universidad EAFIT
Repositorio:
Repositorio EAFIT
Idioma:
eng
OAI Identifier:
oai:repository.eafit.edu.co:10784/5096
Acceso en línea:
http://hdl.handle.net/10784/5096
Palabra clave:
Financial Development
Innovation
Economic Growth
Developing Countries
Rights
License
Acceso abierto
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spelling Medellín de: Lat: 06 15 00 N degrees minutes Lat: 6.2500 decimal degrees Long: 075 36 00 W degrees minutes Long: -75.6000 decimal degrees2015-03-14T22:29:57Z2015-01-012015-03-14T22:29:57Zhttp://hdl.handle.net/10784/5096G00G23O31O29Using firm-level data from 2006 to 2013 for a set of developing countries, we examine the effects of financial development on innovation. Financial development boosts innovation by improving resource allocation and investment toward strategic sectors as well as facilitating technology to promote growth. Using binary response models as well as instrumental variable techniques to correct for endogeneity, we find robust but puzzling results. Contrary to most existing literature, financial development has a negative effect on the probability of a firm to innovate. The effect is conditional on firm size, and only larger firms are the ones that benefit from financial development. These results are robust to different measures of financial development. We argue that this is a result of the design of the financial system in regards to the lack of capital and the institutional system. Consequently, developing countries should first generate appropiate insitutional conditions if they want financial development to spur growth through innovation.engUniversidad EAFITEscuela de Economía y FinanzasDoes financial development promotes innovation in developing economies? An Empirical AnalysisworkingPaperinfo:eu-repo/semantics/workingPaperDocumento de trabajo de investigacióndrafthttp://purl.org/coar/version/c_b1a7d7d4d402bccehttp://purl.org/coar/resource_type/c_8042Acceso abiertohttp://purl.org/coar/access_right/c_abf2Financial DevelopmentInnovationEconomic GrowthDeveloping Countriesmarist19@eafit.edu.combotero7@eafit.edu.cogcanavir@eafit.edu.coAristizabal, MaríaBotero, MariaCanavire, GustavoLICENSElicense.txtlicense.txttext/plain; charset=utf-82556https://repository.eafit.edu.co/bitstreams/d8c9984e-54dc-455b-bdb1-0d291df262b9/download76025f86b095439b7ac65b367055d40cMD51ORIGINAL2015_06_Gustavo_Canavire.pdf2015_06_Gustavo_Canavire.pdfDocumento de trabajo de investigaciónapplication/pdf1273572https://repository.eafit.edu.co/bitstreams/e1eaafa5-deae-4480-ace7-5f51255c6c13/download4d0a5c4641768053a2b46db0f75a9825MD5210784/5096oai:repository.eafit.edu.co:10784/50962024-03-05 14:06:04.266open.accesshttps://repository.eafit.edu.coRepositorio Institucional Universidad EAFITrepositorio@eafit.edu.co
dc.title.eng.fl_str_mv Does financial development promotes innovation in developing economies? An Empirical Analysis
title Does financial development promotes innovation in developing economies? An Empirical Analysis
spellingShingle Does financial development promotes innovation in developing economies? An Empirical Analysis
Financial Development
Innovation
Economic Growth
Developing Countries
title_short Does financial development promotes innovation in developing economies? An Empirical Analysis
title_full Does financial development promotes innovation in developing economies? An Empirical Analysis
title_fullStr Does financial development promotes innovation in developing economies? An Empirical Analysis
title_full_unstemmed Does financial development promotes innovation in developing economies? An Empirical Analysis
title_sort Does financial development promotes innovation in developing economies? An Empirical Analysis
dc.creator.fl_str_mv Aristizabal, María
Botero, Maria
Canavire, Gustavo
dc.contributor.eafitauthor.none.fl_str_mv marist19@eafit.edu.co
mbotero7@eafit.edu.co
gcanavir@eafit.edu.co
dc.contributor.author.none.fl_str_mv Aristizabal, María
Botero, Maria
Canavire, Gustavo
dc.subject.keyword.eng.fl_str_mv Financial Development
Innovation
Economic Growth
Developing Countries
topic Financial Development
Innovation
Economic Growth
Developing Countries
description Using firm-level data from 2006 to 2013 for a set of developing countries, we examine the effects of financial development on innovation. Financial development boosts innovation by improving resource allocation and investment toward strategic sectors as well as facilitating technology to promote growth. Using binary response models as well as instrumental variable techniques to correct for endogeneity, we find robust but puzzling results. Contrary to most existing literature, financial development has a negative effect on the probability of a firm to innovate. The effect is conditional on firm size, and only larger firms are the ones that benefit from financial development. These results are robust to different measures of financial development. We argue that this is a result of the design of the financial system in regards to the lack of capital and the institutional system. Consequently, developing countries should first generate appropiate insitutional conditions if they want financial development to spur growth through innovation.
publishDate 2015
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dc.coverage.spatial.eng.fl_str_mv Medellín de: Lat: 06 15 00 N degrees minutes Lat: 6.2500 decimal degrees Long: 075 36 00 W degrees minutes Long: -75.6000 decimal degrees
dc.publisher.spa.fl_str_mv Universidad EAFIT
dc.publisher.department.spa.fl_str_mv Escuela de Economía y Finanzas
institution Universidad EAFIT
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