Did bank distress stifle innovation during the Great Depression?
By: Ramana Nanda, Tom Nicholas
Contributors: Nicholas, Tom, 1971-; Harvard Business School
Edition: Revised edition
Series: Working paper / Harvard Business School -- 12-106; Working paper (Harvard Business School) -- 12-106
Publisher: Harvard Business School
Published: 2013
Place of publication: Boston]
Language: eng
Number of pages: 29
Description: We find a negative relationship between bank distress and the level, quality and trajectory of firm-level innovation during the Great Depression, particularly for R&D firms operating in capital intensive industries. However, we also show that because a sufficient number of R&D intensive firms were located in counties with lower levels of bank distress, or were operating in less capital intensive industries, the negative effects were mitigated in aggregate. Although Depression era bank distress was associated with the stifling of innovation, our results also help to explain why technological development was still robust following one of the largest shocks in the history of the U.S. banking system.
Notes: "May 2012. (Revised October 2013.)" -- Publisher's website.

Includes bibliographical references (pages 26-29).