Economists take a keen interest in patent rights and their effect on innovation. The primary argument for the existence of patents is, after all, that they incentivise entrepreneurs to seek profit through innovating. This column looks at how patent rights affect innovation by small and large firms, finding that the results vary greatly depending on size.
Alberto Galasso, Mark Schankerman, 07 January 2016
Giorgio Barba Navaretti, Giacomo Calzolari, Alberto Franco Pozzolo, 18 November 2015
Small and medium-sized enterprises are supposed to be the key to growth, everywhere. These enterprises are risky, and when they are so important to the well-being of an economy, someone must bear the risk of funding them. This column argues that there is a real need for policymakers to focus on how we finance SMEs, as getting the institutions and structures right can pay dividends in the long run.
Rick Watson, 02 November 2015
Small and medium-sized European businesses find it hard to raise capital, especially during their development phase. This column compares the situation in the US and Europe and suggests that many SMEs in Europe still face significant difficulties in identifying and accessing sources of funding. Promoting greater equity involvement and improving access to and information on all of the various funding options would do much to boost growth.
Jon Danielsson, Eva Micheler, Katja Neugebauer, Andreas Uthemann, Jean-Pierre Zigrand, 23 February 2015
The proposed EU capital markets union aims to revitalise Europe’s economy by creating efficient funding channels between providers of loanable funds and firms best placed to use them. This column argues that a successful union would deliver investment, innovation, and growth, but it depends on overcoming difficult regulatory challenges. A successful union would also change the nature of systemic risk in Europe.
Tomohiko Inui, Keiko Ito, Daisuke Miyakawa, 06 January 2015
While large Japanese firms have been present internationally for years, small firms have found it difficult to overcome the information obstacles associated with entering overseas markets. This column argues that lender banks can help as they not only provide financial support but also business consulting services using their extensive knowledge obtained through lending transactions. It shows that small and medium firms whose lender banks accumulate more overseas market information are more likely to start exporting.
Kuniyoshi Saito, Daisuke Tsuruta, 14 November 2014
In Japan, loans with 100% guarantees account for more than half of all loans covered by public credit guarantee schemes, but banks claim that they do not offer loans without sufficient screening and monitoring even if the loans are guaranteed. This column presents evidence of adverse selection and moral hazard in Japanese credit guarantee schemes. The problem is less severe for loans with 80% guarantees.
Thorsten Beck, Hans Degryse, Ralph De Haas, Neeltje van Horen, 25 July 2014
The small and medium-size enterprises (SMEs) were among the most severely affected in the Global Crisis. This column discusses new evidence on how different lending techniques affect lending in bad and good times. Data from 21 countries in central and eastern Europe show that ‘relationship lending’ alleviates credit constraints during a cyclical downturn but not during a boom period. The positive impact of relationship lending in an economic downturn is strongest for smaller and more opaque firms and in regions where the downturn is more severe.
Neil Kay, Gavin Murphy, Conor O'Toole, Iulia Siedschlag, Brian O'Connell, 29 June 2014
Small and medium-size enterprises (SMEs) often report difficulties in obtaining external finance. Based on new research, this column argues that these difficulties are not due to greater financial risks associated with SMEs. Instead, they are the result of imperfections in the market for external finance that negatively affect smaller and younger enterprises. The same research has shown that these types of firms are also the most reliant on external finance to support their investment and growth.
Rolando Avendaño, Niels Boehm, Elisa Calza, 27 January 2013
Small and medium-sized enterprises provide the vast majority of employment in developing countries and are keystones in the productive structures of emerging economies. This column argues that the growth of such firms is being hindered by scarce financing. Looking at Latin America, it is clear that public financial institutions are increasingly important in meeting credit demands. If emerging economies want to see long-term growth, there needs to be a comprehensive approach to reducing the ‘traditional’ barriers to small and medium enterprise financing.
Bernard Hoekman, Selina Jackson, 23 January 2013
The revolution in manufacturing – increasingly known as ‘global value chains‘ – has changed the world of trade policy as much as it has changed the global industrial landscape. This column discusses new research suggesting that border management and transport and telecommunications infrastructure services matter far more than trade tariffs. Improving infrastructure and management would increase global GDP far more than the complete elimination of tariffs. However, it won’t be easy. Tackling supply chain barriers will require dynamic and responsive national and international trade policymaking procedures that are more in step with industrial practices.
Thorsten Beck, Vasso P. Ioannidou, Larissa Schäfer, 13 July 2012
Financial aspects of the global crisis and the rolling bank scandals have led many to think again about their reliance on foreign banks. This column presents evidence that foreign banks do act differently. Among other things, they charge lower interest rates, but provide loans for shorter maturities, and are more likely to demand collateral.
Mathias Hoffmann, Iryna Stewen, 19 February 2012
Few would deny that there is a strong link between the health of a country’s banks and its public finances. With that in mind, this column argues that the banking system can learn from banking deregulation in the US, with knock on effects for Europe’s sovereign debt crisis.