"Financial Innovation in the 21st Century: Evidence from U.S. Patenting" (with Amit Seru, Nicholas Short and Yuan Sun)

Abstract:

Patents provide a window into the evolution of financial innovation over the past two decades. We fist highlight the growth and importance of these awards in the 21st century. The dramatic surge in financial patenting has been driven largely by information technology and other non-financial firms, while banks and other financial institutions have narrowed the scope of their innovations. These changes have been accompanied by a decline in the citations to academic knowledge, particularly by banks, and shifts in the geographic location of innovation, seemingly in response to regulatory pressures on banks and access to technological opportunities.

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