Firm Productivity, Innovation and Financial Development

WPIEA2010049 Image
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Author/Editor: Geneviève Verdier, Erasmus Kersting, Era Dabla-Norris
Release Date: © February, 2010
ISBN : 978-1-45196-325-0
Stock #: WPIEA2010049
Stock Status: On back-order

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How do firm-specific actions-in particular, innovation-affect firm productivity? And what is the role of the financial sector in facilitating higher productivity? Using a rich firm-level dataset, we find that innovation is crucial for firm performance as it directly and measurably increases productivity. Moreover, its effects on productivity are mediated through the financial sector; firms reap the maximum benefits from innovation in countries with well-developed financial sectors. This effect is particularly important for firms in high-tech sectors, which typically have higher external financing needs.


Economic sectors , Private sector

More publications in this series: Working Papers

More publications by: Geneviève Verdier ; Erasmus Kersting ; Era Dabla-Norris