Macroprudential policy is designed to make the financial system safer, but it can also reshape the finance available to innovative firms. Using patent data matched to 2,844 firms in 21 European countries over 1990-2021, this column finds that macroprudential tightening is followed by lower patenting and lower patent quality. The effect is strongest when credit growth is weak and among financially constrained firms, and it is concentrated in instruments that directly restrict credit. By contrast, financial-resilience tools carry no measurable short-run innovation cost and may support innovation over longer horizons. The findings suggest that policymakers can protect financial stability without systematically penalising innovation, provided they are selective about which instruments they deploy.



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