IDEAS home Printed from https://ideas.repec.org/a/lui/rivesi/1711.html
   My bibliography  Save this article

Innovation And Finance: The Theoretical Links

Author

Listed:
  • Emanuele Deligia

    (LUISS Guido Carli, Roma)

Abstract

The economic literature shows that the relationship between innovation and finance has a bilateral nature. From one standpoint, financial systems influence innovative activity by exerting their functions through the different components of their structure. From another standpoint, technological innovation impacts on financial systems’ performances and requires the emergence of specific funding solutions. This paper investigates analytically these connections. The results indicate that efficient financial systems can promote innovation by selecting the most valid entrepreneurial initiatives, evaluating their potential earnings and allowing agents to diversify the associated risks. At the same time, different financial structures can determine divergences across countries with respect to their innovative achievements at the sectoral level. It is also found that the resource allocation problem for technological innovation can be mitigated by both the evolution of I.C.T., which decreases information and transaction costs, and the use of venture capital contracts, which reduces asymmetric information and moral hazard problems.

Suggested Citation

  • Emanuele Deligia, 2006. "Innovation And Finance: The Theoretical Links," Economia, Societa', e Istituzioni, Dipartimento di Economia e Finanza, LUISS Guido Carli, vol. 0(1).
    • Handle: RePEc:lui:rivesi:1711
    as

    Download full text from publisher

    File URL: http://static.luiss.it/RePEc/pdf/esi1814.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    innovation; finance; development;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lui:rivesi:1711. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Daniela Di Cagno (email available below). General contact details of provider: https://edirc.repec.org/data/deluiit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.