Campus Units
Finance
Document Type
Article
Publication Version
Accepted Manuscript
Publication Date
10-1-2017
Journal or Book Title
Journal of Financial Intermediation
Volume
32
First Page
45
Last Page
59
DOI
10.1016/j.jfi.2016.07.002
Abstract
The high-tech sector accounts for the majority of corporate innovation in modern economies. In a sample of 38 countries, we document a strong positive relation between the initial size of the country's high-tech sector and subsequent rates of GDP and total factor productivity growth. We also find a strong positive connection between a country's equity (but not credit) market development and the size of its high-tech sector. Our main difference-in-differences estimates show that better developed stock markets support faster growth of innovative-intensive, high-tech industries. The main channels for this effect are higher rates of productivity and faster growth in the number of new high-tech firms. Credit market development fosters growth in industries that rely on external finance for physical capital accumulation but is unimportant for growth in innovation-intensive industries. These findings show that stock markets and credit markets play important but distinct roles in supporting economic growth. Stock markets are uniquely suited for financing technology-led growth, a particularly important concern for advanced economies.
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.
Copyright Owner
Elsevier B.V.
Copyright Date
2017
Language
en
File Format
application/pdf
Recommended Citation
Brown, James R.; Martinsson, Gustav; and Petersen, Bruce C., "Stock markets, credit markets, and technology-led growth" (2017). Finance Publication. 9.
https://lib.dr.iastate.edu/finance_pubs/9
Included in
Corporate Finance Commons, Finance and Financial Management Commons, International Business Commons, International Economics Commons
Comments
This is an accepted manuscript of an article from Journal of Financial Intermediation, 32 (2017); 45-59. DOI: 10.1016/j.jfi.2016.07.002. Posted with permission.