Munich Personal RePEc Archive

Venture Capital and Innovation in Europe

Geronikolaou, George and Papachristou, George (2008): Venture Capital and Innovation in Europe. Published in: SSRN , Vol. http:/, (2008)

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Abstract

This paper examines the direction of causality between Venture Capital (VC) and innovation (proxied by patents) in Europe. We test whether causality runs from patents to VC by estimating a linear dynamic panel model and causality from VC to patents by estimating a panel count model. Evidence from a European sample indicates that causality runs from patents to VC suggesting that, in Europe, innovation seems to create a demand for VC and not VC a supply of innovation. In this sense, innovative ideas seem to lack more than funds in Europe

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