Vol. 10 No. 3 (2022): Business & Management Studies: An International Journal
Articles

Governance content, financial risk and innovation: A panel data analysis

Hatice İMAMOĞLU
PhD, Department of Business Administration Faculty of Economics, Administrative and Social Sciences, Cyprus Science University, Kyrenia / TRNC Mersin 10 – Turkey
Cem PAYASLIOĞLU
PhD, Department of Economics, Eastern Mediterranean University, Famagusta, Mersin 10, Turkey

Published 2022-09-25

Keywords

  • Financial Development, Financial Risk Ratings, Governance Content, Poisson Regression, Negative Binomial Regression, Patent, R&D Expenditure, Foreign Direct Investment, Intellectual Property Rights
  • Finansal Gelişme, Finansal Risk Derecelendirmeleri, Yönetişim İçeriği, Poisson Regresyonu, Negatif Binomial Regresyonu, Patent, Ar-Ge Harcamaları, Doğrudan Yabancı Yatırım, Fikri Mülkiyet Hakları

How to Cite

İMAMOĞLU, H., & PAYASLIOĞLU, C. (2022). Governance content, financial risk and innovation: A panel data analysis. Business &Amp; Management Studies: An International Journal, 10(3), 977–996. https://doi.org/10.15295/bmij.v10i3.2092

Abstract

The effects of governance content characteristics, financial risk, financial development, and innovation infrastructure variables on the size of patent applications in advanced nations during the post-crisis period are examined in this research. For the 2010-2015 period, a panel dataset of 29 advanced economies was employed. The paper uses a Poisson and a Negative Binomial framework to accommodate national heterogeneity and dispersion concerns. According to the estimation results, financial development and financial risk index benefit patent applications, research and development expenditure, intellectual property rights, and gross fixed capital creation. In addition, according to this study, controlling corruption and upholding the rule of law boost innovation, whereas regulatory quality inhibits innovation in advanced economies.

Downloads

Download data is not yet available.

References

  1. Almeida, A. & Teixeira, A.A.C., (2007). Does Patenting Negatively Impact on R&D Investment? An International Panel Data Assessment, FEP Working Papers, No: 255.
  2. Ang, J.B., (2009), Financial development and the FDI-growth nexus: the Malaysian experience, Applied Economics 41, 1595–1601.
  3. Ang, J.B., (2011). Financial development, liberalization and technological deepening, European Economic Review, 55(5), 688–701.
  4. Ang, J.B., (2014). Innovation and financial liberalization, Journal of Banking and Finance, 47 (2014), 214–229.
  5. Beck, T., Demirguc-Kunt, A., & Levine, R., (1999). A New Database on Financial Development and Structure, Financial Sector Discussion Paper No. 2, The World Bank.
  6. Beck, T., & Levine, R., (2002). Industry growth and capital allocation: does having a market-or bank-based system matter? Journal of Financial Economics, 64,147–180.
  7. Beneito P., (2006). The innovative performance of in-house and contracted R&D in terms of patents and utility models, Research Policy, 35, 502–517.
  8. Benfratello, L., Schiantarelli, F., & Sembenelli, A., (2008). Banks and innovation: microeconometric evidence on Italian firms, Journal of Financial Economics, 90, 197–217.
  9. Bernstein, S., (2015). Does going public affect innovation? The Journal of Finance, 70 (4), 1365–1403.
  10. Bravo-Biosca, A., (2007). Essays on innovation and finance. Ph.D. thesis. Harvard University.
  11. Brown, J.R., Fazzari, S.M., & Petersen, B. , (2009). Financing innovation and growth: cash flow, external equity, and the 1990s R&D boom, Journal of Finance, 64, 151–185.
  12. Brown, J., Martinsson, G., & Petersen, B., (2013). Laws, stock markets, and innovation. Journal of Finance, 68, 1517–1549.
  13. Carpenter, R., & Petersen, B. (2002). Capital market imperfections, high-tech investment, and new equity financing, The Economic Journal, 112, F54–F72.
  14. Chen, Q. (2014). Advanced econometrics and stata application. Adv. Educ. Publishing House.
  15. Chen, M-H. (2010). The economy, tourism growth and corporate performance in the Taiwanese hotel industry, Tourism Management, 31, 665–675.
  16. Chu, A. C., Leung, C. K. Y. & Tang, E., (2012). Intellectual property rights, technical progress and the volatility of economic growth, Journal of Macroeconomics, 34(3), 749–756.
  17. DiRienzo, C., & Das, J. (2014). Innovation and role of corruption and diversity: A cross-country study, International Journal of Cross Cultural Management, 15(1), 51-72.
  18. Easterly, W., & Levine, R., (2003). Tropics, germs and crops: how endowments influence economic development, Journal of Monetary Economics, 50(1), 3-39.
  19. Eaton, J., & Kortum, S., (1996). Trade in ideas: patenting and productivity in the OECD, Journal of International Economics, 40 (3/4), 251–278.
  20. Eicher, T. S., & Newiak, M., (2013). Intellectual property rights as development determinants, Canadian Journal of Economics, 46, 422.
  21. Ernst, D. (2006). Innovation offshoring: Asia’s emerging role in global innovation networks. Honolulu: East-West Center Report Nr. 10.
  22. Furman, J.L., Porter, M.E., & Stern, S., (2002). The Determinants of National Innovative Capacity, Research Policy, 31, 899-933.
  23. Ghazal, R., & Zulkhibri, M. (2015). Determinants of innovation outputs in developing countries: Evidence from panel data negative binomial approach. Journal of economic studies.
  24. Hanley, A., Liu, W., & Vaona, A. (2011). Financial development and innovation in China: evidence from the provincial data, Kiel Working Paper, No. 1673. Kiel Institute of World Economy, Hindenburgufer.
  25. Hong, J., Feng, B., Wu, Y., & Wang, L. (2016). Do government grants promote innovation efficiency in China's high-tech industries?. Technovation, 57, 4-13.
  26. Hanley, A., W. H. Liu, and A. Vaona. “Financial Development and Innovation in China: Evidence from the Provincial Data.” Kiel Working Papers 1673, Kiel Institute for the World Economy, 2011.
  27. Hanley, A., W. H. Liu, and A. Vaona. “Financial Development and Innovation in China: Evidence from the Provincial Data.” Kiel Working Papers 1673, Kiel Institute for the World Economy, 2011.
  28. Hoti, S., & McAleer, M., (2006). How Does Country Risk Affect Innovation? An Application to Foreign Patents Registered in the USA, Journal of Economic Surveys, 20(4), 691–714.
  29. Hsiao, C. (2014). Analysis of panel data (No. 54). Cambridge university press.
  30. Hsu, P., Tian, X., & Xu, Y., (2014). Financial development and innovation: Cross country evidence, Journal of Financial Economics, 112, 116–135.
  31. Hu, M-C., & Mathews, J.A., (2005). National Innovative Capacity in East Asia, Research Policy, 34, 1322-1349.
  32. Jaffe, A., (1986). Technological Opportunity and Spillovers of R&D: Evidence from Firms' Patents, Profits and Market Value, American Economic Review, 76(5), 984-1001.
  33. Jaffe, A.B., (1989). Real Effects of Academic Research, The American Economic Review, 79(5), 957-970.
  34. Jenkins, H.P., & Katircioglu, S.T., (2010). The bounds test approach for cointegration and causality between financial development, international trade and economic growth: the case of Cyprus, Applied Economics 42, 1699–1707.
  35. Kanwar, S., & Evenson, R., (2003). Does Intellectual Property Protection spur Technological Change? Oxford Economic Papers, 55, 235-264.
  36. Kareem, O. I. (2018). The determinants of large-scale land investments in Africa. Land Use Policy, 75, 180-190.
  37. Kaufmann, D., Kraay, A., & Mastruzzi, M., (2010). The Worldwide Governance Indicators: Methodology and Analytical Issues. World Bank Policy Research Working Paper No. 5430.
  38. Kitch, E., (1977). The nature and function of the patent system, Journal of Law and Economics, 20(2), 265-290.
  39. Kortum, S., & Lerner, J., (2000). Does Venture Capital Spur Innovation? Rand Journal of Eco- nomics, 31(4), 674-92.
  40. Lee, S., Nam, Y., Lee, S., & Son, H. (2016). Determinants of ICT innovations: A cross-country empirical study. Technological Forecasting and Social Change, 110, 71-77.
  41. Levine, R., Loayza, N., & Beck, T., (2000). Financial intermediation and growth: Causality and causes without outliers, Journal of Monetary Economics, 46(1), 31–77.
  42. Meliciani, V., (2000). The relationship between R&D, investment and patents: A panel data analysis, Applied Economics, 32, 1429–1437.
  43. Nanda R., & Nicholas. T., (2014). Did bank distress stifle innovation during the great depression?, Journal of Financial Economics, 114:273–92.
  44. Porter, M.E., & Stern, S., (2000). Measuring the ‘Ideas’ Production Function: Evidence from International Patent Output, NBER Working Paper, No: 7891.
  45. Popov, A.A., & Roosenboom, P., (2012). Venture capital and patented innovation: evidence from Europe, Economic Policy, 27(71), 447–482.
  46. Popp, D., (2002). Induced Innovation and Energy Prices, The American Economic Review, 92(1), 160-180.
  47. Rajan, R., & Zingales, L., (1998). Financial dependence and growth, American Economic Review 88, 559–586.
  48. Ramzi, T. & Salah, A.B., (2015). The determinants of innovation capacity in the less innovative countries in the Euro Mediterranean Region, Journal of the Knowledge Economy, 1–18.
  49. Sakakibara, M., & Branstetter, L. (2001), “Do stronger patents induce more innovation? Evidence from the 1988 Japanese patent law reforms”, RAND Rand Journal of Economics, 32(1), 77–100.
  50. Schneider, P.H., (2005). International Trade, Economic Growth and Intellectual Property Rights: A Panel Data Study of Developed and Developing Countries, Journal of Development Economics, 78, 529-547.
  51. Trajtenberg, M., (1990). Patents as indicators of innovation. In: Economic Analysis of Product Innovation, Harvard University Press, Cambridge, MA.
  52. Tüylüoğlu, Ş., & Saraç, Ş., (2012). Gelişmiş ve Gelişmekte Olan Ülkelerde İnnovasyonun Belirleyicileri: Ampirik bir Analiz, Eskişehir Osmangazi Üniversitesi İİBF, 7(1) 39-74.
  53. Veracierto, M., (2008). Corruption and innovation, Economic Perspectives, 32(1), 29–39.
  54. Weinstein, D.E., & Yafeh, Y., (1998). On the costs of a bank-centered financial system: evidence from the changing main bank relations in Japan, Journal of Finance, 53, 635–672.
  55. Wu, J., Zhuo, S., & Wu, Z. (2017). National innovation system, social entrepreneurship, and rural economic growth in China. Technological Forecasting and Social Change, 121, 238-250.