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Financial system, innovation and regional development: a study on the relationship between liquidity preference and innovation in Brazil

Author

Listed:
  • João Prates Romero

    (Cedeplar-UFMG)

  • Frederico G. Jayme Jr

    (Cedeplar-UFMG)

Abstract

This paper discusses and assesses the features of the Brazilian Financial System, as well as the impacts of Liquidity Preference on Regional Development in Brazil. In the post-Keynesian literature, money is considered endogenous to the economic system, introduced in the economic activity through the credit provided by banks. Taken as non-neutral, banks are economic agents which can present lower or higher liquidity preference. Because of that, banks are also particularly important to the development process. Precisely, we tested the influence of credit and the role of banks in regional development. We estimate a panel across states in Brazil in order to test the impact of liquidity preference and other financial variables on Brazilian states’ number of patents, aiming at testing the importance of the bank system to technological progress and regional development. Conclusions confirm both hypotheses.

Suggested Citation

  • João Prates Romero & Frederico G. Jayme Jr, 2010. "Financial system, innovation and regional development: a study on the relationship between liquidity preference and innovation in Brazil," Textos para Discussão Cedeplar-UFMG td412, Cedeplar, Universidade Federal de Minas Gerais.
    • Handle: RePEc:cdp:texdis:td412
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    File URL: https://www.cedeplar.ufmg.br/pesquisas/td/TD%20412.pdf
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    References listed on IDEAS

    as
    1. Marco Crocco & Anderson Cavalcante & Cláudio Barra, 2006. "The behavior of liquidity preference of banks and public and regional development: the case of Brazil," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 28(2), pages 217-240, January.
    2. Stiglitz, Joseph E, 1989. "Financial Markets and Development," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 5(4), pages 55-68, Winter.
    3. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
    4. Marco Crocco & Anderson Cavalcante & Cláudio Barra, 2005. "The behavior of liquidity preference of banks and public and regional development: the case of Brazil," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 28(2), pages 217-240.
    5. Dow, Sheila C, 1982. "The Regional Composition of the Money Multiplier Process," Scottish Journal of Political Economy, Scottish Economic Society, vol. 29(1), pages 22-44, February.
    6. Abramovitz, Moses, 1986. "Catching Up, Forging Ahead, and Falling Behind," The Journal of Economic History, Cambridge University Press, vol. 46(2), pages 385-406, June.
    7. Almeida, Daniel B. de Castro & Jayme Jr., Frederico G., 2008. "Bank consolidation and credit concentration in Brazil (1995-2004)," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    8. Joseph E. Stiglitz, 1989. "Markets and Development," NBER Working Papers 2961, National Bureau of Economic Research, Inc.
    9. Eduardo da Motta e Albuquerque, 2007. "Inadequacy of technology and innovation systems at the periphery," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 31(5), pages 669-690, September.
    10. Sheila Dow & Carlos Rodriguez-Fuentes, 1997. "Regional Finance: A Survey," Regional Studies, Taylor & Francis Journals, vol. 31(9), pages 903-920.
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    Cited by:

    1. Veysov, Alexander & Stolbov, Mikhail, 2011. "The impact of financial sector on innovation activity: theoretical background and new evidence from russian banking sector," MPRA Paper 38747, University Library of Munich, Germany.

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    More about this item

    Keywords

    Monetary System; National Innovation System; Credit; Brazil;
    All these keywords.

    JEL classification:

    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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