Keywords: Financial development; Innovation; Nonlinear effect; Market competition
JEL Classification: G15; O31; O40
학회소식
[2022년 5차 CAFM2022]Financial Development and Innovation: The Role of Market Structure
작성자 : 관리자
조회수 : 1524
게시일 :
2022-12-20
We assess how financial development affects innovation. For this purpose, we employ a unique Research Quotient (RQ) database from 1980 to 2018, and observe significant invertedU effects of financial development on innovation for equity and credit markets. Specifically, the effects of the markets are sector-specific, implying that the inverted-U effect of the equity market on innovation is mainly driven by its diminishing effect on innovation in hightechnology industries, while credit markets mostly affect innovation in non-high-technology industries. Regarding the mechanism, we posit that the inverted-U shape between finance and innovation may be explained by the disproportionate funds allocation-induced market concentration.
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