Financial stability, competitiveness and banks' innovation capacity: Evidence from the Global Financial Crisis

Marta Degl'Innocenti, Kevin Grant, Aleksandar Sevic, Nickolaos Tzeremes

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    15 Citations (Scopus)
    36 Downloads (Pure)

    Abstract

    This paper provides nuanced evidence on the effect of competitiveness and financial stability on banks’ innovation-capacity (technological-change) levels during the Global Financial Crisis (GFC) in 2007–2008. We applied contemporary developments in non-parametric frontier analysis, employing a new index, the Global Financial Centres Index, to measure the business competitiveness of 45 financial centres. Our findings indicated a nonlinear and positive relationship between financial centres’ competitiveness, banks’ stability and innovation-capacity levels. This suggests that banks’ ability to increase stability alongside financial centres’ stability in a highly competitive environment acts as a protective measure against the GFC's negative effects.

    Original languageEnglish
    Pages (from-to)35-46
    Number of pages12
    JournalInternational Review of Financial Analysis
    Volume59
    Early online date6 Jul 2018
    DOIs
    Publication statusPublished - Oct 2018

    Keywords

    • Financial centres
    • Global Financial Crisis
    • Innovation capacity
    • Non-parametric frontier analysis

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