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Integrating finance into the multi-level perspective: Technology niche-finance regime interactions and financial policy interventions

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  • Geddes, Anna
  • Schmidt, Tobias S.

Abstract

Any major socio-technical transition requires a fundamental re-direction of financial capital from incumbent to new technologies and practices. While the transitions literature conceptually covers financial markets, the role of finance is marginalized and has scarcely been analysed empirically. To address this gap, here we build on the multi-level perspective (MLP), which considers financial markets as part of the existing regime. We argue that the role of finance is highly relevant for the niche-regime interaction: Redirecting finance towards new niche technologies requires that either the niche is fit for and conforms to the financial regime's expectations or the financial regime is stretched and transformed in order to accept and finance niche technologies. Based on 56 interviews, we identify factors that determine interactions between the financial regime and technology niches: these include acceptable risk and transaction size, an abundance of knowledge and heuristics in both the regime and niche, and an extensive, existing industry network. We further analyse how State Investment Bank (SIB) interventions in Germany, the UK and Australia, aimed to mobilise private finance into low-carbon project development, affect the interaction between the technology niche and financial regime, i.e. whether they resulted in fitting-and-conforming the technological niche for the financial regime or stretching-and-transforming the financial regime. Our results point to several important effects of SIB interventions, with most effects fitting the niche to the regime. However, we also detect effects that stretch and transform the financial regime – through evolutionary processes. Importantly, some effects occur as a consequence of the primary effects. Based on our findings we discuss policy implications on how to accelerate transitions through policies aiming at finance as well as theoretical insights gained through our analysis.

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  • Geddes, Anna & Schmidt, Tobias S., 2020. "Integrating finance into the multi-level perspective: Technology niche-finance regime interactions and financial policy interventions," Research Policy, Elsevier, vol. 49(6).
    • Handle: RePEc:eee:respol:v:49:y:2020:i:6:s0048733320300652
    DOI: 10.1016/j.respol.2020.103985
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