Banking Deregulation and Innovation

Chava, S and Oettl, A and Subramanian, A and Subramanian, K (2013) Banking Deregulation and Innovation. Working Paper. SSRN. (Unpublished)

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Abstract

We document empirical support for a key micro-level channel --- innovation by young, private firms --- through which financial sector deregulation affects economic growth. We find that intrastate banking deregulation, which increased the local market power of banks, decreased the level and risk of innovation by young, private firms. In contrast, interstate banking deregulation, which decreased the local market power of banks, increased the level and risk of innovation by young, private firms. These contrasting effects on innovation also translated into contrasting effects on economic growth. Our study suggests that the nature of financial sector deregulation crucially affects its potential benefits to the real economy.

Affiliation: Indian School of Business
ISB Creators:
ISB CreatorsORCiD
Subramanian, KUNSPECIFIED
Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Banking, Innovation, Growth, Young firms, Private firms
Subjects: Finance
Depositing User: Ilayaraja M
Date Deposited: 08 Jun 2019 18:21
Last Modified: 09 Jun 2019 19:12
URI: http://eprints.exchange.isb.edu/id/eprint/1040
Publisher URL: https://ssrn.com/abstract=2225526
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