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on Financial Development and Growth |
| By: | Srichander Ramaswamy |
| Abstract: | The European Stability Mechanism (ESM) is evaluating the Greek financial assistance programmes to learn lessons that could enhance its ability to address possible future crises. This discussion paper provides input for this exercise by focusing on banking sector reforms within European Financial Stability Facility (EFSF) and ESM programmes. It examines how the banking sector performed, problems in implementing some reforms, and how banks contributed to Greek economic growth, performance, and the financial system’s resilience to counter potential future shocks. |
| Date: | 2020–06–11 |
| URL: | http://d.repec.org/n?u=RePEc:stm:dpaper:10&r= |
| By: | David Kohn; Fernando Leibovici; Michal Szkup |
| Abstract: | This paper reviews recent studies on the impact of financial frictions on international trade. We first present evidence on the relation between measures of access to external finance and export decisions. We then present an analytical framework to analyze the impact of financial frictions on firms' export decisions. Finally, we review recent applications of this framework to investigate the impact of financial frictions on international trade dynamics across firms, industries, and in the aggregate. We discuss related empirical, theoretical, and quantitative studies throughout. |
| Keywords: | financial frictions; international trade; credit constraints; export decisions |
| JEL: | F1 F4 |
| Date: | 2021–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:93275&r= |
| By: | Jean-Charles Bricongne; Antoine Cosson; Albane Garnier-Sauveplane; Rémy Lecat; Irena Peresa; Yuliya Vanzhulova |
| Abstract: | This paper analyzes the impact on financial flows of institutional factors promoting financial integration such as European integration or trying to tame them such as capital control or macro-prudential policies. We use a detailed database of bilateral financial assets and construct gravity models, for foreign direct investment, portfolio flows and other investments. Capital control policies have limited and disparate effects, being particularly effective through restrictions on inward flows for destination countries. The impacts of macro-prudential measures are complex, with macro-prudential measures in the origin country financial sector having a positive impact on outward capital flows and macroprudential measures in destination countries having a negative impact on inward capital flows. European integration has played a positive role on financial flows. We also emphasize the benefits of cooperation between the origin and destination countries, both for capital control and macro-prudential measures. |
| Keywords: | Gravity Equation, International Financial Assets and Flows, Macro-Prudential Measures, Restrictions to Financial Flows, European Integration |
| JEL: | F38 G15 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:842&r= |
| By: | Miguel Faria-e-Castro; Pascal Paul; Juan M. Sanchez |
| Abstract: | We develop a simple model of relationship lending where lenders have an incentive to evergreen loans by offering better terms to less productive and more indebted firms. We detect such lending distortions using loan-level supervisory data for the United States. Low-capitalized banks systematically distort their risk assessments of firms to window-dress their balance sheets and extend relatively more credit to underreported borrowers. Consistent with our theoretical predictions, these effects are driven by larger outstanding loans and low-productivity firms. We incorporate the theoretical mechanism into a dynamic heterogeneous-firm model to show that evergreening can affect aggregate outcomes, resulting in lower interest rates, higher levels of debt, and lower aggregate productivity. |
| Keywords: | Evergreening; Zombie-Lending; Misallocation; COVID-19 |
| JEL: | E32 E43 E44 E52 E60 G21 G32 |
| Date: | 2021–10–22 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:93278&r= |
| By: | Gottwald-Belinic, Martina |
| Abstract: | This paper explores the heterogeneity of resource efficiency and investigate the associations of productivity and efficiency in relationship to ownership, region and access to capital within the Chinese manufacturing sector. We use the Hicks- Moorsteen Index to decompose within a firm efficiency conditional on ownership, sectors, and provinces for the period from 1998 until 2007. The results show a high heterogeneity of labor and capital resource efficiency among the firms. The pace of economic growth required capital investment in the sector. The consolidated results show higher misallocation of capital for State Owned Enterprises (SOEs) compared to private firms. The factor accumulation within SOEs contributed to a higher deterioration of resources. Our findings indicate necessity for growth in efficiency and support policy development for improved resource reallocation. |
| Keywords: | Total Factor Productivity (TFP), China’s new development stage, Industrial Upgrading in China, Output and TFP Growth Potential |
| JEL: | D24 L53 O12 O53 |
| Date: | 2021–08–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:110372&r= |
| By: | Jungmann, Benjamin |
| Abstract: | This paper contributes to the ongoing growth models (GMs) debate by investigating the growth drivers of emerging capitalist economies (ECEs) in the periods before (2000-2008) and after (2009-2019) the Global Financial Crisis (GFC). By drawing mostly on post-Keynesian economics, six growth drivers are considered: Finance, i.e., household debt; changes in income distribution; price and non-price competitiveness, as well as commodity prices; and finally, fiscal policy. By conducting crosscountry simple and multiple linear regressions to explain the growth of 19 ECEs in both periods, we find that post-GFC growth was driven by non-price factors while price competitiveness played a role in neither period. Likewise, commodity prices did not drive growth either. In terms of distribution, our results indicate that cross-country growth was driven by rising income inequality in both periods; however, this relation lacks significance. In the post-crisis period, growth was associated with rising profit shares. While this relation also lacks significance, it has to be assessed against various possibilities for seemingly profit-led growth. Finally, with household debt accelerating and fiscal policy becoming more expansionary after the crisis, our results indicate a potentially more prominent role for these factors in driving post-crisis growth, however, this finding lacks robustness. We argue that the sparse robust findings result from ECEs' heterogeneity, particularly in terms of their growth models and subordinated financialization. |
| Keywords: | growth model,growth driver,financialization,emerging capitalist economies,post-Keynesian economics |
| JEL: | E11 E12 E65 F62 F65 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ipewps:1722021&r= |
| By: | Hounnou, E. Fèmi; Dedehouanou, Houinsou; Zannou, Afio; Aguey, Segnon; Biaou, Gauthier |
| Keywords: | Agricultural and Food Policy |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae21:315002&r= |
| By: | Hein, Eckhard; Jimenez, Valeria |
| Abstract: | This paper tries to clarify some important aspects around the zero-growth discussion. Starting from an accounting perspective, we analyse the implications of zero growth and clarify the stability conditions of such an economy. This is complemented with a monetary circuit approach - which, like any model, has to respect the national income and financial accounting conventions. The latter allows us to show that a stationary economy, i.e an economy with zero net investment, is compatible with positive profits and interest rates. It is also argued that a stationary economy does not generate systemic financial instability, in the sense of rising or falling financial assets- or financial liabilities-income ratios, if the financial balances of each macroeconomic sector are zero. In order to analyse the dynamic stability of such an economy, we make use of an autonomous demand-led growth model driven by government expenditures. We show that a stable stationary state with zero growth, positive profits, and a positive interest rate is possible. However, the stable adjustment of government expenditure-capital and government debt-capital ratios to their long-run equilibrium values requires specific maxima for the propensity to consume out wealth and for the rate of interest, assuming a balanced government budget and zero retained earnings of the firm sector. |
| Keywords: | Ecological macroeconomics,post-Keynesian economics,stationary-state economics,growth imperative |
| JEL: | Q01 O44 P10 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ipewps:1692021&r= |
| By: | Giovanni Carnazza (Università di Roma Tre); Nicola Caravaggio (Università di Roma Tre) |
| Abstract: | In the economic literature, there has been a large heterogeneity of results in relation to the impact of fiscal variables on interest rates. Focusing on the Italian economy and considering the nature of our interest rate determinants (public finance variables and nominal GDP growth), we decided to undertake a cointegration analysis relying on the Autoregressive Distributed Lag (ARDL) bound test approach, a particular suitable procedure within this peculiar framework, able to disentangle short-run and long-run dynamics. Our results are quite controversial, shedding new light on the role of gross debt and primary balance as a share of GDP in relation to the long-term Italian nominal interest rate. In this context, the ECB has probably played a crucial role, especially in the most severe phases of the Sovereign debt crisis. The European fiscal framework then shows further critical issues in relation to the new role that fiscal variables play within our econometric analysis. |
| Keywords: | Italian economy; Sovereign bond yield; European Monetary Union; Public finance |
| JEL: | E43 E58 E62 G12 C13 C22 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:rtr:wpaper:0265&r= |
| By: | Atif Mian; Ludwig Straub; Amir Sufi |
| Abstract: | We propose a theory of indebted demand, capturing the idea that large debt burdens lower aggregate demand, and thus the natural rate of interest. At the core of the theory is the simple yet under-appreciated observation that borrowers and savers differ in their marginal propensities to save out of permanent income. Embedding this insight in a two-agent perpetual youth model, we find that recent trends in income inequality and financial deregulation lead to indebted household demand, pushing down the natural rate of interest. Moreover, popular expansionary policies-such as accommodative monetary policy-generate a debt-financed short-run boom at the expense of indebted demand in the future. When demand is sufficiently indebted, the economy gets stuck in a debt-driven liquidity trap, or debt trap. Escaping a debt trap requires consideration of less conventional macroeconomic policies, such as those focused on redistribution or those reducing the structural sources of high inequality. |
| JEL: | E21 E44 E6 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:968&r= |
| By: | Mattia Guerini (OFCE - Observatoire français des conjonctures économiques - Sciences Po - Sciences Po); Philipp Harting; Mauro Napoletano (OFCE - Observatoire français des conjonctures économiques - Sciences Po - Sciences Po) |
| Abstract: | We develop a model to study the impact of corporate governance on firm investment decisions and industry competition. In the model, governance structure affects the distribution of shares among short- and long-term oriented investors, the robustness of the management regarding pos- sible stockholder interference, and the managerial remuneration scheme. A bargaining process between firm's stakeholders determines the optimal allocation of financial resources between real investments in R&D and financial investments in shares buybacks. We characterize the relation between corporate governance and firm's optimal investment strategy and we study how different governance structures shape technical progress and the degree of competition over the industrial life cycle. Numerical simulations of a calibrated set-up of the model show that pooling together industries characterized by heterogeneous governance structures generate the well-documented inverted-U shaped relation between competition and innovation. |
| Keywords: | governance structure,industry dynamics,competition,technical change |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03374377&r= |
| By: | Tobias Berg (Frankfurt School of Finance & Management); Andreas Fuster (Ecole Polytechnique Fédérale de Lausanne; Swiss Finance Institute; Centre for Economic Policy Research (CEPR)); Manju Puri (Duke University - Fuqua School of Business; NBER) |
| Abstract: | In this paper, we review the growing literature on FinTech lending – the provision of credit facilitated by technology that improves the customer-lender interaction or lenders’ screening and monitoring of borrowers. FinTech lending has grown rapidly, though in developed economies like the U.S. it still only accounts for a small share of total credit. An increase in convenience and speed appears to have been more central to FinTech lending’s growth than improved screening or monitoring, though there is certainly potential for the latter, as is the case for increased financial inclusion. The COVID 19 pandemic has shown potential vulnerabilities of FinTech lenders, although in certain segments they have displayed rapid growth. |
| Keywords: | FinTech, lending, COVID-19 |
| JEL: | G21 G23 G51 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp2172&r= |
| By: | Frederic Boissay; Torsten Ehlers; Leonardo Gambacorta; Hyun Song Shin |
| Abstract: | The business model of big techs rests on enabling direct interactions among a large number of users on digital platforms, such as in e-commerce, search and social media. An essential by-product is their large stock of user data, which they use to offer a wide range of services and exploit natural network effects, generating further user activity. Increased user activity completes the circle, as it generates yet more data. Building on the self-reinforcing nature of the data- network-activities loop, some big techs have ventured into financial services, including payments, money management, insurance and lending. The entry of big techs into finance promises efficiency gains and greater financial inclusion. At the same time, it introduces new risks associated with market power and data privacy. The nature of the new trade-off between efficiency and privacy will depend on societal preferences, and will vary across jurisdictions. This increases the need to coordinate policies both at the domestic and international level. |
| JEL: | E51 G23 O31 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:970&r= |
| By: | Hottenrott, Hanna; Berger, Marius |
| JEL: | G24 L26 O25 O31 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc21:242383&r= |
| By: | Wache, Benjamin |
| JEL: | F3 G14 N2 N7 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc21:242444&r= |
| By: | Marc Flandreau (University of Pennsylvania); Stefano Pietrosanti (Bank of Italy); Carlotta E. Schuster (UNCTAD) |
| Abstract: | This paper explores the reasons why sovereign borrowers post collateral. Such behavior is paradoxical because conventional interpretations of collateral stress repossession of the assets pledged as the key to securing lenders against information asymmetries and moral hazard. However, repossession is generally difficult in the case of sovereign debt and in some cases impossible. Nevertheless, such sovereign `hypothecations` have a long history and are again becoming very popular today in developing countries. To explain sovereign collateralization, we emphasize an informational channel. Posting collateral produces information on opaque borrowers by displaying borrowers` behavior and resources. We support this interpretation by examining the hypothecation `mania` of 1849-1875, when sovereigns borrowing in the London Stock Exchange pledged all kinds of intangible revenues. Yet, at that time, sovereign immunity fully protected both sovereigns and their assets and possessions. Still, we show that hypothecations significantly decreased the cost of sovereign debt. To explain how, we stress the pledges` role in documenting sovereigns` wealth and the management of revenue streams. Based on an exhaustive library of bond prospectuses collected from primary sources, matched with a panel of sovereign bond yields and an innovative measure of sovereign fiscal transparency, we show that collateral minutely described in debt covenants served to document and monitor sovereign resources and development prospects. Encasing this information in contracts written by lawyers served to certify the quality of the resulting data disclosure process, explaining investors` readiness to pay a premium. |
| Keywords: | Collateral, Information, Sovereign debt, Informal enforcement, Financial innovation, Contract innovation |
| JEL: | N20 G24 K12 K33 H63 |
| Date: | 2021–10–07 |
| URL: | http://d.repec.org/n?u=RePEc:thk:wpaper:inetwp167&r= |
| By: | Deodhar, Satish Y. |
| Abstract: | For millennia, gold is considered auspicious in India and consumers have a fascination for possessing gold, gold jewellery, and gold coins. In this paper I document the sacredness associated with gold, the ancient Indian references to gold jewellery, availability and technology of extracting gold in those times, minting of gold coins and its function as a medium of exchange and store of value, and accumulation of gold stock due to favourable trade with the Occident in the common era. I draw attention to Indian obsession with gold in modern times, when none is produced domestically and it contributing negatively to India’s external account. The gargantuan stock of about 24,245 tonnes of gold in India has to be considered as accumulated hoardings and not accumulated savings. Along with increasing the propensity of flow of savings going into financial markets and not in physical gold; suggestions are made to popularize and improve implementation of gold monetization scheme (GMS). This will re-channel idle stock of gold into financial markets and reduce deficit on the external account. |
| Date: | 2021–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:iim:iimawp:14664&r= |
| By: | Li, Xiaoming; Liu, Zheng; Peng, Yuchao; Xu, Zhiwei |
| Abstract: | We study the impact of China’s 2013 implementation of Basel III on bank risk-taking and its responses to monetary policy shocks using confidential loan-level data from a large Chinese bank. Guided by theory, we use a difference-in-difference identification, exploiting cross-sectional differences in lending behaviors between high-risk and low-risk bank branches before and after the new regulations. We find that, through a risk-weighting channel, changes in regulations significantly reduced bank risk-taking, both on average and conditional on monetary policy easing. However, banks reduce risk-taking by increasing lending to ostensibly low-risk state-owned enterprises (SOEs) under government guarantees, despite their low average productivity. |
| JEL: | E52 G21 G28 |
| Date: | 2021–10–29 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofitp:2021_015&r= |
| By: | Anne Duquerroy (Banque de France); Adrien Matray (Princeton University); Farzad Saidi (Boston University and CEPR) |
| Abstract: | This paper documents that monetary policy affects credit supply through banks’ cost of funding. Using administrative credit-registry and regulatory bank data, we find that banks can incur an increase in their funding costs of at least 30 basis points before they adjust their lending. For identification, we exploit the existence of regulated-deposit accounts in France whose interest rates are set by the government and are, thus, not directly affected by the monetary-policy rate.When banks’ funding cost increases and they contract their lending, we observe portfolio reallocations consistent with risk shifting: banks that depend on regulated deposits lend less to large firms, and relatively more to small firms and entrepreneurs. |
| Keywords: | Monetary-policy transmission; deposits; credit supply; SMEs; savings |
| JEL: | E23 E32 E44 G20 G21 L14 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:pri:cepsud:280&r= |
| By: | Riccardo Degasperi; Seokki Simon Hong; Giovanni Ricco (Departement of Economics - University of Warwick - University of Warwick [Coventry]) |
| Abstract: | We quantify global US monetary policy spillovers by employing a high-frequency identification and big data techniques, in conjunction with a large harmonised dataset covering 30 economies. We report three novel stylised facts. First, a US monetary policy tightening has large contractionary effects onto both advanced and emerging economies. Second, flexible exchange rates cannot fully insulate domestic economies, due to movements in risk premia that limit central banks' ability to control the yield curve. Third, financial channels dominate over demand and exchange rate channels in the transmission to real variables, while the transmission via oil and commodity prices determines nominal spillovers. |
| Keywords: | monetary policy,trilemma,exchange rates,monetary policy spillovers |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03373749&r= |
| By: | Morales, Paola; Osorio, Daniel; Lemus, Juan S.; Sarmiento Paipilla, Miguel (Tilburg University, Center For Economic Research) |
| Keywords: | Bank-lending channel; internationalization of banks; banks’ business models; bank risk-taking; macroprudential FX regulation |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:a8a61825-7d96-4635-8e61-8a7886445fae&r= |
| By: | Ahnert, Toni; Martinez-Miera, David |
| JEL: | G01 G21 G28 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc21:242348&r= |
| By: | Thiago Christiano Silva; Sergio Rubens Stancato de Souza; Solange Maria Guerra |
| Abstract: | This paper investigates how COVID-19 affected the local market power of Brazilian credit markets. We first propose a novel methodology to estimate bank market power at the local level. We design a data-intensive method for computing a local Lerner index by developing heuristics to allocate national-level bank inputs, products, and costs to each branch locality using data from many sources. We then explore the exogenous variation in COVID-19 prevalence across Brazilian localities to analyze how the pandemic influenced local market power through the effective price and marginal cost channels. Despite reducing the economic activity substantially in more affected localities, COVID-19 did not significantly impact the effective price channel: bank branches offset the decrease in credit income by reducing credit concessions. However, bank branches more affected by COVID-19 experienced increased marginal costs as they could not rapidly adjust their cost factors in response to the decrease in credit concessions. Consequently, COVID-19 reduced banks’ local market power via the marginal cost channel. However, banks that spent more in IT before the COVID-19 outbreak suffered less replacing more easily local borrowers with remote ones. We then design a bank-specific measure of exposure to COVID-19 to examine how the pandemic affected different banks within the same locality. Banks more exposed to COVID-19 increased their local market power mainly via the effective price channel, which operated through a negative supply shock and not increased credit income. The paper provides new insights as to how crises can affect local market power in non-trivial ways. |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:bcb:wpaper:558&r= |
| By: | Regele, Fabian; Gründl, Helmut |
| Abstract: | Historical evidence like the global financial crisis from 2007-09 highlights that sector concentration risk can play an important role for the solvency of insurers. However, current microprudential frameworks like the US RBC framework and Solvency II consider only name concentration risk explicitly in their solvency capital requirements for asset concentration risk and neglect sector concentration risk. We show by means of US insurers' asset holdings from 2009 to 2018 that substantial sectoral asset concentrations exist in the financial, public and real estate sector, and find indicative evidence for a sectoral search for yield behavior. Based on a theoretical solvency capital allocation scheme, we demonstrate that the current regulatory approaches can lead to inappropriate and biased levels of solvency capital for asset concentration risk, and should be revised. Our findings have also important implications on the ongoing discussion of asset concentration risk in the context of macroprudential insurance regulation. |
| Keywords: | Microprudential Insurance Regulation,Asset Concentration Risk,Systematic Risk,Idiosyncratic Risk,Sectoral Asset Diversification |
| JEL: | G01 G11 G22 G28 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:icirwp:4021&r= |
| By: | Mathithibane, Mpho Steve |
| Abstract: | The aim of this paper is to investigates the influence of trust on insurance penetration in the developing Microinsurance sector of South Africa. Legacy issues and deeply rooted structural and institutional frailties have resulted in substandard levels of financial inclusion for low-income earners in the country. This segment of consumers is highly vulnerable to social, economic and as the covid-19 pandemic has proved, health shocks. Microinsurance has often been touted as a solution to improve resilience and turn the tide of significant adverse economic outcomes for the low-income segment. This paper explores the role of trust as a key construct for business success in the microinsurance sector. The study findings indicate that creation of trust and reassurance that claims will be honored when liability occurs are the main elements valued by prospective and existing microinsurance consumers. These findings contribute to advancing knowledge within the microinsurance segment, in particular, key traits needed in constructing a successful insurance programme as well as the messaging and serving element that needs to be placed at the forefront of product design and marketing in order to build trust. |
| Keywords: | Microinsurance, low-income market, South Africa |
| JEL: | D18 G22 |
| Date: | 2021–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:110406&r= |
| By: | David Grover (GEM - Grenoble Ecole de Management); Swaroop Rao (GEM - Grenoble Ecole de Management, IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc) |
| Abstract: | Article 6 of the Paris Agreement provides for the creation of a successor to the Clean Development Mechanism (CDM), the parameters of which are currently being operationalised. This paper uses the broad literature on the relationship between general foreign direct investment (FDI) and inequality in FDI host countries to develop expectations about the likely impact of past and future international mitigation investment on inequality, unemployment and poverty outcomes. Using 2000 and 2010 census data for small geographic areas in Brazil, we compare the change in those outcomes in areas that experienced CDM project activity to the same in areas that did not, using a difference-indifference approach. We find that areas with CDM project activity experienced improvements in those outcomes, which appear to be driven by project types that are associated with 'primary' sector activity. Including measurement and reporting procedures for these broader sustainable development outcomes in the rulebook of a post-2020 agreement could be favourable to the interests of both developed and developing countries. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:hal:gemptp:hal-03404189&r= |
| By: | Joëlle Noailly, Roger Smeets |
| Abstract: | Achieving the goals of the Paris Agreement and of climate neutrality by 2050 in the European Union will require mobilizing financial investments towards clean energy innovation. This study examines the role of internal finance (cash flows and cash holdings) and financing constraints for innovation in energy technologies. We construct a dataset for 1,300 European firms combining balance-sheet information and patenting activities in renewable (REN) and fossil-fuel (FF) technologies and estimate the sensitivity of patenting activities to firm’s internal finance. We use count estimation techniques and control for a large set of firm-specific characteristics and market developments in REN and FF technologies. We find that patenting activities of firms specialized in REN innovation are significantly more sensitive to a shock in cash flows than firms specializing in FF innovation. Hence, our results emphasize that innovative firms in clean energy may be particularly vulnerable to financing constraints. We discuss the implications of these results for energy transition policies aiming to redirect finance towards clean energy R&D. |
| Date: | 2021–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:gii:ciesrp:cies_rp_69&r= |