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R&D and Credit Rationing in SMEs

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  • Maria Luisa Mancusi
  • Andrea Vezzulli

Abstract

We study the effects of credit rationing on Research and Development (R&D) investment using survey and accounting data on a large representative sample of manufacturing small and medium size enterprises (SMEs). Our econometric model accounts for the endogeneity of our credit rationing indicator and employs an innovative theory based identification strategy. We find that credit rationing has a significantly negative effect on both the probability to set up R&D activities and on the level of R&D spending (conditioned on the R&D decision), but the overall estimated reduction in R&D spending is largely to be associated with the first effect.

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File URL: http://pascal.iseg.utl.pt/~depeco/wp/wp122013.pdf
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Bibliographic Info

Paper provided by ISEG - School of Economics and Management, Department of Economics, University of Lisbon in its series Working Papers Department of Economics with number 2013/12.

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Date of creation: Jul 2013
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Handle: RePEc:ise:isegwp:wp122013

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Postal: Department of Economics, ISEG - School of Economics and Management, University of Lisbon, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL
Web page: https://aquila1.iseg.ulisboa.pt/aquila/departamentos/EC

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Keywords: R&D; credit rationing; Whited and Wu index; bivariate probit; IV Tobit;

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