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Abstract

We study whether R&D-intensive firms are liquidity-constrained, by also modeling their antecedent decision to apply for credit. This sample selection issue is relevant when studying a borrower-lender relationship, as the same factors can influence the decisions of both parties. We find firms with no or low R&D intensity to be less likely to request extra funds. When they do, we observe a higher probability of being denied credit. Such a relationship is not supported by evidence from the R&D-intensive firms. Thus, our findings lend support to the notion of credit constraints being severe only for a sub-sample of innovative firms. Furthermore, the results suggest that the way in which the R&D activity is organized may differentially affect a firms’ probability of being credit-constrained.

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Article provided by Wiley Blackwell in its journal Bulletin of Economic Research.

Volume (Year): 59 (2007)
Issue (Month): 2 (04)
Pages: 149-178

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Handle: RePEc:bla:buecrs:v:59:y:2007:i:2:p:149-178

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Find related papers by JEL classification:

• D45 - Microeconomics - - Market Structure and Pricing - - - Rationing; Licensing
• G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
• G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
• E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

References

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Citations

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Cited by:

1. P. Brighi & R. Patuelli & G. Torluccio, 2012. "Self-Financing of Traditional and R&D Investments: Evidence from Italian SMEs," Working Papers wp845, Dipartimento Scienze Economiche, Universita' di Bologna.
   
   • Paola Brighi & Roberto Patuelli & Giuseppe Torluccio, 2012. "Self-Financing of Traditional and R&D Investments: Evidence from Italian SMEs," Working Paper Series 61_12, The Rimini Centre for Economic Analysis.
2. Savignac, F., 2007. "The impact of financial constraints on innovation: What can be learned from a direct measure?," Working papers 169, Banque de France.
3. Claudio A. Piga & Giuseppe Medda, 2007. "Technological Spillovers and Productivity in Italian Manufacturing Firms," Working Paper Series 08-07, The Rimini Centre for Economic Analysis, revised Jul 2007.
   
   • Claudio A. Piga & Giuseppe Medda, 2007. "Technological Spillovers and Productivity in Italian Manufacturing Firms," Discussion Paper Series 2007_17, Department of Economics, Loughborough University, revised Jul 2007.
4. Hottenrott, Hanna & Peters, Bettina, 2011. "Innovative capability and financing constraints for innovation: More money, more innovation?," ZEW Discussion Papers 09-081 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
   
   • Hanna Hottenrott & Bettina Peters, 2012. "Innovative Capability and Financing Constraints for Innovation: More Money, More Innovation?," The Review of Economics and Statistics, MIT Press, vol. 94(4), pages 1126-1142, November.
   • Hottenrott, Hanna & Peters, Bettina, 2012. "Innovative capability and financing constraints for innovation: More money, more innovation?," ZEW Discussion Papers 09-081 [rev.2], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
   • Hottenrott, Hanna & Peters, Bettina, 2009. "Innovative capability and financing constraints for innovation: More money, more innovation?," ZEW Discussion Papers 09-081, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
5. Georg Paula, 2010. "Financing Conditions, the Concept of Innovation Capacity and the Innovative Activity of Firms," CESifo Working Paper Series 3296, CESifo Group Munich.
6. Kadri Männasoo & Jaanika Meriküll, 2011. "How do demand fluctations and credit constraints affect R&D? Evidence from Central, Southern and Eastern Europe," Bank of Estonia Working Papers wp2011-09, Bank of Estonia, revised 19 Jul 2011.
7. Georgios Efthyvoulou & Priit Vahter, 2012. "Financial Constraints, Innovation Performance, and Sectoral Disaggregation," Working Papers 2012030, The University of Sheffield, Department of Economics.

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