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Financial innovation in the UK

Author

Listed:
  • Shelagh A. Heffernan
  • Xiaolan Fu
  • Xiaoqing (Maggie) Fu

Abstract

This study employs a national survey of over 1100 British financial firms to ascertain the determinants of financial innovation and their sales success using the logit and the generalized Tobit models. We find that the likelihood of financial innovation rises with the size of financial firms, employee education, greater expenditure on research and development, the availability of finance and the extent to which firms cooperate with each other. Perceptions of economic risk and innovation costs are also influential. R&D, cooperation and human capital are the main variables driving the success of financial innovation, measured by the percentage share of innovations sold. Firms in London/the south have a significantly greater tendency to innovate, though Scotland also does well. Stock broking, fund management and related activities are more innovative than firms in the financial intermediation and pension/insurance sectors.

Suggested Citation

  • Shelagh A. Heffernan & Xiaolan Fu & Xiaoqing (Maggie) Fu, 2013. "Financial innovation in the UK," Applied Economics, Taylor & Francis Journals, vol. 45(24), pages 3400-3411, August.
    • Handle: RePEc:taf:applec:v:45:y:2013:i:24:p:3400-3411
    DOI: 10.1080/00036846.2012.711942
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    References listed on IDEAS

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    2. Baldwin, John R., 1997. "The Importance of Research and Development for Innovation in Small and Large Canadian Manufacturing Firms," Analytical Studies Branch Research Paper Series 1997107e, Statistics Canada, Analytical Studies Branch.
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