IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Relationship lending and firm innovativeness

  • Giannetti, Caterina

This study investigates the effects of close ties between firms and banks – as measured by the share and length of the relationship with the main bank, and by the number of lenders – on a firm's ability to develop innovation and introduce new products. As these effects may vary depending on both the type of firm and innovation, this study provides results for small and high-tech firms and distinguishes between process and product innovation. The results suggest that for small firms banks do not intervene at the development stage of an innovation but rather play their traditional role of financing investments for constrained firms. In contrast, relationship banks do play an important role for high-tech firms in the development of a process innovation and in the introduction of new products. In addition, for both types of firms, the financing decision of the main bank seems to be correlated with the lending behaviour of other banks, with multiple borrowing exerting a positive effect on firm innovative capability.

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.

File URL:
Download Restriction: Full text for ScienceDirect subscribers only

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.

Article provided by Elsevier in its journal Journal of Empirical Finance.

Volume (Year): 19 (2012)
Issue (Month): 5 ()
Pages: 762-781

in new window

Handle: RePEc:eee:empfin:v:19:y:2012:i:5:p:762-781
DOI: 10.1016/j.jempfin.2012.08.005
Contact details of provider: Web page:

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.:

as in new window
  1. Ongena, Steven & Tümer-Alkan, Günseli & von Westernhagen, Natalja, 2007. "Creditor concentration: an empirical investigation," Discussion Paper Series 2: Banking and Financial Studies 2007,15, Deutsche Bundesbank, Research Centre.
  2. Ross Levine, 2002. "Bank-Based or Market-Based Financial Systems: Which is Better?," NBER Working Papers 9138, National Bureau of Economic Research, Inc.
  3. Ralf Elsas & Frank Heinemann & Marcel Tyrell, 2004. "Multiple but Asymmetric Bank Financing: The Case of Relationship Lending," Working Paper Series: Finance and Accounting 141, Department of Finance, Goethe University Frankfurt am Main.
  4. Colin Mayer & Wendy Carlin, 1999. "Finance, Investment and Growth," Economics Series Working Papers 1999-FE-09, University of Oxford, Department of Economics.
  5. Allen, Franklin & Gale, Douglas, 1998. "Diversity of Opinion and Financing of New Technologies," Working Papers 98-29, C.V. Starr Center for Applied Economics, New York University.
  6. Pierre Mohen & Jacques Mairesse & Marcel Dagenais, 2006. "Innovativity : A Comparison Across Seven European Countries," Working Papers 2006-15, Centre de Recherche en Economie et Statistique.
  7. Bertocco Giancarlo, 2006. "Finance and Development: is Schumpeter’s Analysis still relevant?," Economics and Quantitative Methods qf06013, Department of Economics, University of Insubria.
  8. Luigi Benfratello & Fabio Schiantarelli & Alessandro Sembenelli, 2005. "Banks and Innovation: Microeconometric Evidence on Italian Firms," Boston College Working Papers in Economics 631, Boston College Department of Economics, revised 13 Jun 2007.
  9. Hall, Bronwyn & Mairesse, Jacques, 2006. "Empirical studies of innovation in the knowledge driven economy," MERIT Working Papers 028, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  10. 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.
  11. Luigi Guiso & Raoul Minetti, 2007. "The Structure of Multiple Credit Relationships: Evidence from US Firms," Economics Working Papers ECO2007/46, European University Institute.
  12. Pietro ALESSANDRINI & Andrea PRESBITERO & Alberto ZAZZARO, 2008. "Banche e Imprese nei Distretti Industriali," Working Papers 309, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  13. Bolton, Patrick & Scharfstein, David S, 1996. "Optimal Debt Structure and the Number of Creditors," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 1-25, February.
  14. Ross Levine, 2004. "Finance and Growth: Theory and Evidence," NBER Working Papers 10766, National Bureau of Economic Research, Inc.
  15. Andrea Filippo Presbitero & Alberto Zazzaro, 2009. "Competition and Relationship Lending: Friends or Foes?," Mo.Fi.R. Working Papers 13, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  16. Mitchell A. Petersen & Raghuram G. Rajan, 1994. "The Effect of Credit Market Competition on Lending Relationships," NBER Working Papers 4921, National Bureau of Economic Research, Inc.
  17. Arnoud W. A. Boot & Anjan V. Thakor, 2000. "Can Relationship Banking Survive Competition?," Journal of Finance, American Finance Association, vol. 55(2), pages 679-713, 04.
  18. Gary Chamberlain, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Oxford University Press, vol. 47(1), pages 225-238.
  19. Rivers, Douglas & Vuong, Quang H., 1988. "Limited information estimators and exogeneity tests for simultaneous probit models," Journal of Econometrics, Elsevier, vol. 39(3), pages 347-366, November.
  20. Hyytinen, Ari & Toivanen, Otto, 2005. "Do financial constraints hold back innovation and growth?: Evidence on the role of public policy," Research Policy, Elsevier, vol. 34(9), pages 1385-1403, November.
  21. Ángel de la Fuente & José M. Marín, 1994. "Innovation, "bank" monitoring and endogenous financial development," Economics Working Papers 59, Department of Economics and Business, Universitat Pompeu Fabra.
  22. Pietro ALESSANDRINI & Andrea PRESBITERO & Alberto ZAZZARO, 2007. "Bank Size or Distance: What Hampers Innovation Adoption by SMEs ?," Working Papers 304, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  23. Elsas, Ralf, 2005. "Empirical determinants of relationship lending," Journal of Financial Intermediation, Elsevier, vol. 14(1), pages 32-57, January.
  24. Boot, Arnoud W. A., 2000. "Relationship Banking: What Do We Know?," Journal of Financial Intermediation, Elsevier, vol. 9(1), pages 7-25, January.
  25. Jacques Mairesse & Pierre Mohnen, 2010. "Using Innovations Surveys for Econometric Analysis," NBER Working Papers 15857, National Bureau of Economic Research, Inc.
  26. Ferri, Giovanni & Messori, Marcello, 2000. "Bank-firm relationships and allocative efficiency in Northeastern and Central Italy and in the South," Journal of Banking & Finance, Elsevier, vol. 24(6), pages 1067-1095, June.
  27. Mathias Dewatripont & Gerard Roland, 2000. "Soft Budget Constraints, Transition, and Industrial Change," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 156(1), pages 245-, March.
  28. Mohnen, Pierre & Raymond, Wladimir & Palm, Franz & Schim van der Loeff, Sybrand, 2007. "The Behavior of the Maximum Likelihood Estimator of Dynamic Panel Data Sample Selection Models," MERIT Working Papers 007, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  29. Cohen, Wesley M., 2010. "Fifty Years of Empirical Studies of Innovative Activity and Performance," Handbook of the Economics of Innovation, Elsevier.
  30. Allen N. Berger & Gregory F. Udell, 1998. "The economics of small business finance: the roles of private equity and debt markets in the financial growth cycle," Finance and Economics Discussion Series 1998-15, Board of Governors of the Federal Reserve System (U.S.).
  31. Xavier Freixas, 2005. "Deconstructing relationship banking," Investigaciones Economicas, Fundación SEPI, vol. 29(1), pages 3-31, January.
  32. Claessens, Stijn & Laeven, Luc, 2004. "What Drives Bank Competition? Some International Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(3), pages 563-83, June.
  33. von Rheinbaben, Joachim & Ruckes, Martin, 2004. "The number and the closeness of bank relationships," Journal of Banking & Finance, Elsevier, vol. 28(7), pages 1597-1615, July.
  34. Tadesse, Solomon, 2006. "Innovation, Information, and Financial Architecture," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 41(04), pages 753-786, December.
  35. Maria Savona & Giulio Cainelli & Rinaldo Evangelista, 2006. "Innovation and economic performance in services. A firm level analysis," Post-Print halshs-00231578, HAL.
  36. repec:adr:anecst:y:1999:i:55-56:p:06 is not listed on IDEAS
  37. Elyasiani, Elyas & Goldberg, Lawrence G., 2004. "Relationship lending: a survey of the literature," Journal of Economics and Business, Elsevier, vol. 56(4), pages 315-330.
  38. Christian Dustmann & María Engracia Rochina-Barrachina, 2007. "Selection correction in panel data models: An application to the estimation of females' wage equations," Econometrics Journal, Royal Economic Society, vol. 10(2), pages 263-293, 07.
  39. Demirguc-Kunt, Asli & Maksimovic, Vojislav, 2000. "Funding growth in bank-based and market-based financial systems : evidence from firm level data," Policy Research Working Paper Series 2432, The World Bank.
  40. Herrera, Ana María & Minetti, Raoul, 2007. "Informed finance and technological change: Evidence from credit relationships," Journal of Financial Economics, Elsevier, vol. 83(1), pages 223-269, January.
  41. Bhattacharya Sudipto & Chiesa Gabriella, 1995. "Proprietary Information, Financial Intermediation, and Research Incentives," Journal of Financial Intermediation, Elsevier, vol. 4(4), pages 328-357, October.
  42. Annamaria Nese & Niall O’Higgins, 2007. "Attrition bias in the Capitalia panel," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 54(3), pages 383-403, September.
  43. Ongena, Steven & Smith, David C., 2001. "The duration of bank relationships," Journal of Financial Economics, Elsevier, vol. 61(3), pages 449-475, September.
  44. Colin Mayer, 1990. "Financial Systems, Corporate Finance, and Economic Development," NBER Chapters, in: Asymmetric Information, Corporate Finance, and Investment, pages 307-332 National Bureau of Economic Research, Inc.
  45. J. Kornai & E. Maskin & G. Roland., 2004. "Understanding the Soft Budget Constraint," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 11.
  46. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2007. "The Cost of Banking Regulation," Economics Working Papers ECO2007/43, European University Institute.
  47. Silvia Magri, 2009. "The financing of small innovative firms: the Italian case," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 18(2), pages 181-204.
  48. Ernst-Ludwig von Thadden, 1995. "Long-Term Contracts, Short-Term Investment and Monitoring," Review of Economic Studies, Oxford University Press, vol. 62(4), pages 557-575.
  49. Degryse, H.A. & Ongena, S., 2006. "The Impact of Competition on Bank Orientation," Discussion Paper 2006-68, Tilburg University, Center for Economic Research.
  50. Elisa Ughetto, 2008. "Does internal finance matter for R&D? New evidence from a panel of Italian firms," Cambridge Journal of Economics, Oxford University Press, vol. 32(6), pages 907-925, November.
  51. Schmookler, Jacob, 1962. "Economic Sources of Inventive Activity," The Journal of Economic History, Cambridge University Press, vol. 22(01), pages 1-20, March.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:empfin:v:19:y:2012:i:5:p:762-781. 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: (Shamier, Wendy)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.