Credit Constraints And The Cyclicality Of R&D Investment: Evidence From France
We use a French firm-level data set containing 13,000 firms over the period 1994â€“2004 to analyze the relationship between credit constraints and firmsâ€™ R&D behavior over the business cycle. Our main results can be summarized as follows: (i) R&D investment is countercyclical without credit constraints, but it becomes procyclical as firms face tighter credit constraints; (ii) this result is only observed for firms in sectors that depend more heavily upon external finance, or that are characterized by a low degree of asset tangibility; (iii) in more credit-constrained firms, R&D investment plummets during recessions but does not increase proportionally during upturns.
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Volume (Year): 10 (2012)
Issue (Month): 5 (October)
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