Credit Rationing in High-Tech firms and sample selection
AbstractWe argue that it may be inappropriate to study whether high-tech firms are liquidity-constrained, without first 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 both the demand and the supply side. E.g., we find firms engaged in R&D to be less likely to request extra funds. When they do we observe a higher probability of being denied credit. Thus, our findings lend support to the notion of credit constraints being severe for innovative firms, although we suggest that other measures of innovative activity, in addition to total R&D expenditures, should be used to understand the occurrence of credit constraints in the high-tech sector.
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Bibliographic InfoPaper provided by Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia in its series Working Paper CRENoS with number 200304.
Date of creation: 2003
Date of revision:
bivariate probit; innovation; selectivity;
Find related papers by JEL classification:
- D45 - Microeconomics - - Market Structure and Pricing - - - Rationing; Licensing
- E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-07-26 (All new papers)
- NEP-CFN-2004-07-26 (Corporate Finance)
- NEP-ENT-2004-07-26 (Entrepreneurship)
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