Building an innovation-friendly financial system
The financial system is a pivotal component of the UK’s innovation and investment ecosystem. Following the financial crisis, the financial sector came under enormous criticism for its role in bringing about the most severe recession since the 1930s. In addition, the banking sector has been criticised for neglecting its core business, including lending to support business generation and growth.
This work programme focuses on how to reform the financial sector to ensure such a crisis does not occur again. Specifically, we are looking at the role of the financial sector on two fronts: one, ensuring that the financial system is a source of stability and growth for the economy, and two, mitigating the market failure in lending to innovative, high-growth firms.
The Big Innovation Centre is undertaking cutting-edge analysis on both of these fronts, building on our 2011 submission to the Independent Commission on Banking and our report 'The Discouraged Economy'. First, we seek to propose potential reforms to the regulation of the banking business model to ensure financial stability. Second, we are identifying and evaluating the systemic barriers faced by firms in access to finance, looking particularly at the capital structure of firms as well as risk assessment and mitigation.
Take a look at the work we currently do around finance, incorporated in 3 key themes: banking business models; innovative SMEs; regulatory environment.