Innovation and Financing: a Look Through a Lender's Lens: Innovation and Development: Challenges from the Perspective of Lending Practices of Banks in Ethiopia

The research was initiated to pinpoint the trend of bank lending from the context of enabling innovations, to identify the basic factors that influence the success of innovations and to forward workable solutions in the area. The findings of the research show that bank lending in Ethiopia has been skewed towards more organized, experienced and collateral possessing firms than innovators. In addition, the current practice has nothing new when compared with the trend despite slight increase in the share of loan granted to the manufacturing sector, the sector that comparatively contains higher innovative activities. While assessing the factors that affect the success of innovation, access to finance was found the only significant variable. Educational level, family size, nature of the invention and availability of training were found insignificant to affect the success of innovation. Basing this, the researcher forwarded some workable solutions regarding the need for frequent revision of innovation policies, separating the possession of private banks from respective borrowers and encouraging financial policies that favor new start ups and innovators