Revisiting the finance-innovation nexus: Evidence from a non-linear approach

Law, Siong Hook; Lee, Weng Chang; Singh, Nirvikar

doi:10.1016/j.jik.2017.02.001

Cited by 89 publications

(65 citation statements)

References 34 publications

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“…Relying on data from 75 developed and developing countries over the period spanning 1996–2010, Law, Lee, and Singh (2018) investigated the nonlinear nexus between financial development and innovation using GMM estimators. Although the authors found an inverted U‐shaped relationship between finance and innovation, further results from their study show that the finance–innovation link varies with the level of institutional quality.…”

Section: Financial Development Economic Growth and Institutions: A mentioning

confidence: 99%

Institutions and the financial development–economic growth nexus in sub‐Saharan Africa

Aluko

Ibrahim

2020

Economic Notes

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Using a sample splitting approach that does not impose an exogenous quadratic term, we examine the effect of financial development on economic growth in sub-Saharan Africa by allowing the link to be mediated by the level of institutions. Our findings reveal a disproportionate growth-enhancing effect of finance, given countriesʼ distinct level of institutional quality. More specifically, when the International Country Risk Guide-based measure of institutions is used as the threshold variable, below the optimal level of institutional quality, financial development does not significantly promote economic growth. For countries with institutional quality above the threshold, higher finance is associated with growth. However, when institutions are measured by World Governance Indicators proxy, we find a significant effect of financial development, irrespective of whether a country is below or above the threshold. Interestingly, the growthenhancing effect of finance is greater for low-institution countries relative to high-institution countries. Thus, through its ability to provide some crucial roles, the well-developed financial sector may also perform the function of sound institutions in influencing economic growth.

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Section: Financial Development Economic Growth and Institutions: A mentioning

confidence: 99%

Institutions and the financial development–economic growth nexus in sub‐Saharan Africa

Aluko

Ibrahim

2020

Economic Notes

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“…Financial development can stimulate technological innovation (Law, Lee, and Singh 2017), thus having a positive impact on financing efficiency (Naeem and Li 2019). Some scholars believe that low financing efficiency is due to inadequate financing mechanisms and that special financial products should be designed to address this gap (Painuly et al 2003).…”

Section: Theory Developmentmentioning

confidence: 99%

R&D investment and financing efficiency in Chinese environmental protection enterprises: perspectives of COVID-19 and supply chain financial regulation

Sheng

et al. 2020

International Journal of Logistics Research and Applications

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“…Orinda and Otieno (2017) believes that the access to credits determines long-term survival of the sector companies in the market. An interesting insight into corporate finance is also presented by Law et al (2018) who, in turn, observed the relationship between the level of expenditure on operations and the level of innovation. According to them, financial resources positively influence the innovativeness of the entity only to a certain level.…”

Section: The Financial Situation Of Smesmentioning

confidence: 97%

Parametric Conditions of High Financial Risk in the SME Sector

Ślusarczyk

Grondys

2019

Risks

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The sector of SME is the major force for the national economic and social development. Financial risk is one of the key threats to the activity of small and medium enterprises. The most common manifestation of the financial risk of SMEs is difficulty in financing the business and lack of funds for development. Banks are unwilling to grant loans to such companies. Moreover, it is the rising operating costs that cause shrinking profits, which may result in corporate debt, difficulty in debt repayment, and consequently, high financial risk of these entities. Numerous differences in conducting the activity of small and large enterprises intensify this risk and mean that the model of credit financing for companies is not adjusted to the capabilities and principles of the operation of small enterprises. Therefore, risk management is one of the most important internal processes in small and medium enterprises. The identification of factors that affect the level of financial risk in these entities is therefore crucial. The main objective of this research was to analyze the impact of selected parametric characteristics of the SME sector on the intensity of financial risk they take. This objective was accomplished on the basis of the survey with the participation of Polish SMEs. In order to test the adopted research assumptions, the linear regression model was used with four continuous variables for each type of the identified financial risk. Based on the final research results, the logit model was obtained for the risk of insufficient profits. It was indicated that both the internationalization of the company and the ability to manage risk are the only factors that affect a high level of risk of low income. The article ends with the discussion and the comparison with some previous research in this area.

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Revisiting the finance-innovation nexus: Evidence from a non-linear approach

Cited by 89 publications

References 34 publications

Institutions and the financial development–economic growth nexus in sub‐Saharan Africa

Institutions and the financial development–economic growth nexus in sub‐Saharan Africa

R&D investment and financing efficiency in Chinese environmental protection enterprises: perspectives of COVID-19 and supply chain financial regulation

Parametric Conditions of High Financial Risk in the SME Sector

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