Banking deregulation and innovation

Chava, S and Oettl, A and Subramanian, A and Subramanian, K (2013) Banking deregulation and innovation. Journal of Financial Economics, 109 (3). pp. 759-774. ISSN 1879-2774

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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. © 2013 Elsevier B.V.

Item Type: Article
Subjects: Business and Management
Date Deposited: 16 Nov 2014 11:51
Last Modified: 12 Jul 2023 18:03
URI: https://eprints.exchange.isb.edu/id/eprint/285

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