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R&D investment, Credit Rationing and Sample Selection

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Author Info
Gianfranco Atzeni () (University of Sassari)
Claudio Piga () (Dept of Economics univ. of Loughborough)

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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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File URL: http://www.lboro.ac.uk/departments/ec/RePEc/lbo/lbowps/piga2005wps6.pdf
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Publisher Info
Paper provided by Department of Economics, Loughborough University in its series Discussion Paper Series with number 2005_6.

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Date of creation: Jun 2005
Date of revision: Jun 2005
Handle: RePEc:lbo:lbowps:2005_6

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Postal: Loughborough, Leicestershire, LE11 3TU
Phone: +44 (0) 1509 222701
Fax: +44 (0) 1509 223910
Web page: http://www.lboro.ac.uk/departments/ec/Research.htm
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For technical questions regarding this item, or to correct its listing, contact: (Dr. Claudio Piga).

Related research
Keywords: Bivariate Probit; Innovation; selectivity; in-house R&D.;

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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; Mortgages
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure
E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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References listed on IDEAS
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. 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. [Downloadable!]
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