Access to Finance and Technological Innovation: Evidence from Antebellum America

Using a unique setting in Antebellum America, this paper provides new evidence on how access to finance impacts technological innovation.

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Jessie Wang (Arizona State University)

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Jessie Wang is Assistant Professor of Finance at the Arizona State University. Her research interests are Banking and Networks, Labour and Finance, History and Finance.

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We exploit antebellum America, a unique setting with staggered passage of free banking laws across states and well-documented differences in labour scarcity between free and slave states. We find that access to finance spurred innovation as measured by patenting activities, especially in free states where labour was scarce. In slave states, however, access to finance reduced the hiring costs of slave labour and discouraged innovation that substituted for slave labour.