R&D Investment, Credit Rationing And Sample Selection
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.
(This abstract was borrowed from another version of this item.)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 59 (2007)
Issue (Month): 2 (04)
|Contact details of provider:|| Web page: http://www.blackwellpublishing.com/journal.asp?ref=0307-3378|
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=0307-3378|
References listed on IDEAS
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.:
- Asher Blass & Oved Yosha, 2003. "Financing R&D in mature companies: An empirical analysis," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 12(5), pages 425-447.
- Heckman, James, 2013.
"Sample selection bias as a specification error,"
Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
- Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
- Robin Boadway & Michael Keen, 2004.
"Financing New Investments under Asymmetric Information: A General Approach,"
1017, Queen's University, Department of Economics.
- Robin Boadway & Michael Keen, 2004. "Financing New Investments under Asymmetric Information: a General Approach," Cahiers de recherche 0407, CIRPEE.
- Bronwyn H. Hall, 2002.
"The Financing of Research and Development,"
NBER Working Papers
8773, National Bureau of Economic Research, Inc.
- Bronwyn Hall, 2004. "The financing of research and development," Chapters, in: Financial Systems, Corporate Investment in Innovation, and Venture Capital, chapter 2 Edward Elgar Publishing.
- Bronwyn H. Hall, 2002. "The Financing of Research and Development," Oxford Review of Economic Policy, Oxford University Press, vol. 18(1), pages 35-51, Spring.
- Hall, Bronwyn H., 2002. "The Financing of Research and Development," Department of Economics, Working Paper Series qt34c1c643, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Hall, Bronwyn, 2002. "The Financing of Research and Development," Department of Economics, Working Paper Series qt5rf0x9gz, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Bronwyn H. Hall, 2003. "The Financing of Research and Development," Finance 0303003, EconWPA.
- Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
- Leland, Hayne E & Pyle, David H, 1977.
"Informational Asymmetries, Financial Structure, and Financial Intermediation,"
Journal of Finance,
American Finance Association, vol. 32(2), pages 371-87, May.
- Hayne E. Leland and David H. Pyle., 1976. "Informational Asymmetries, Financial Structure, and Financial Intermediation," Research Program in Finance Working Papers 41, University of California at Berkeley.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- Bayona, Cristina & Garcia-Marco, Teresa & Huerta, Emilio, 2001. "Firms' motivations for cooperative R&D: an empirical analysis of Spanish firms," Research Policy, Elsevier, vol. 30(8), pages 1289-1307, October.
- Fraja, Gianni De & Piga, Claudio A. G., 2004. "Strategic debt in vertical relationships: theory and evidence," Research in Economics, Elsevier, vol. 58(2), pages 103-123, June.
- Hellmann, Thomas & Stiglitz, Joseph, 2000. "Credit and equity rationing in markets with adverse selection," European Economic Review, Elsevier, vol. 44(2), pages 281-304, February.
- Tether, Bruce S., 2002. "Who co-operates for innovation, and why: An empirical analysis," Research Policy, Elsevier, vol. 31(6), pages 947-967, August.
- Mocnik, Dijana, 2001. "Asset specificity and a firm's borrowing ability: an empirical analysis of manufacturing firms," Journal of Economic Behavior & Organization, Elsevier, vol. 45(1), pages 69-81, May.
- Veugelers, Reinhilde & Cassiman, Bruno, 1999. "Make and buy in innovation strategies: evidence from Belgian manufacturing firms," Research Policy, Elsevier, vol. 28(1), pages 63-80, January.
- Guiso, Luigi, 1998.
"High-tech firms and credit rationing,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 35(1), pages 39-59, March.
- Gianni De Fraja & Claudio A. G. Piga, .
"Strategic Debt in Vertical Relationships,"
98/16, Department of Economics, University of York.
- Gianni deFraja & Claudio Piga, 2000. "Strategic Debt in Vertical Relationships," Econometric Society World Congress 2000 Contributed Papers 0059, Econometric Society.
- Greene, William, 1998. "Sample selection in credit-scoring models1," Japan and the World Economy, Elsevier, vol. 10(3), pages 299-316, July.
- Claudio A . Piga & Marco Vivarelli, 2004.
"Internal and External R&D: A Sample Selection Approach,"
Oxford Bulletin of Economics and Statistics,
Department of Economics, University of Oxford, vol. 66(4), pages 457-482, 09.
- Claudio A. Piga & Marco Vivarelli, 2003. "Internal and External R&D: A Sample Selection Approach," Papers on Entrepreneurship, Growth and Public Policy 2004-05, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
- C. Piga & M. Vivarelli, 2003. "Sample selection in estimating the determinants of cooperative R&D," Applied Economics Letters, Taylor & Francis Journals, vol. 10(4), pages 243-246.
- de Meza, David & Webb, David, 2000. "Does credit rationing imply insufficient lending?," Journal of Public Economics, Elsevier, vol. 78(3), pages 215-234, November.
- Bagella, M. & Becchetti, L. & Caggese, A., 2001. "Financial constraints on investments: A three-pillar approach," Research in Economics, Elsevier, vol. 55(2), pages 219-254, June.
- Diamond, Douglas W, 1991. "Monitoring and Reputation: The Choice between Bank Loans and Directly Placed Debt," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 689-721, August.
- Spiros Bougheas & Holger Görg & Eric Strobl, 2003. "Is R & D Financially Constrained? Theory and Evidence from Irish Manufacturing," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 22(2), pages 159-174, March.
- Sudipto Bhattacharya & Jay R. Ritter, 1983. "Innovation and Communication: Signalling with Partial Disclosure," Review of Economic Studies, Oxford University Press, vol. 50(2), pages 331-346.
- Jensen, Richard & Showalter, Dean, 2004. "Strategic debt and patent races," International Journal of Industrial Organization, Elsevier, vol. 22(7), pages 887-915, September.
- Jeremy Berkowitz & Michelle J. White, 2004. "Bankruptcy and Small Firms' Access to Credit," RAND Journal of Economics, The RAND Corporation, vol. 35(1), pages 69-84, Spring.
- Robert E. Carpenter & Bruce C. Petersen, 2002. "Capital Market Imperfections, High-Tech Investment, and New Equity Financing," Economic Journal, Royal Economic Society, vol. 112(477), pages F54-F72, February.
- Bester, Helmut, 1985. "Screening vs. Rationing in Credit Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 75(4), pages 850-55, September.
- Showalter, Dean, 1999. "Strategic debt: evidence in manufacturing," International Journal of Industrial Organization, Elsevier, vol. 17(3), pages 319-333, April.
When requesting a correction, please mention this item's handle: RePEc:bla:buecrs:v:59:y:2007:i:2:p:149-178. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.