Minibonds and investment: Do they promote intangible assets?

This paper examines whether the 2012 introduction of minibonds, a new market-based financial instrument specifically designed for small and medium enterprises, has promoted intangible investments in Italy. We address selection bias by applying a propensity score matching (PSM) and test our hypotheses using a panel Difference-in-Differences (DID) approach. Our results show that minibond-issuing firms invest in intangibles, a component difficult to finance via bank credit, more than other firms and more than they invest in tangibles. We also find that (i) this effect is persistent over time, (ii) minibond-issuing firms attract additional resources from other intermediaries after issuing minibonds, and (iii) alternative financing, such as minibonds, can reduce financial constraints. Results are corroborated by a large number of robustness exercises, including changes in matching criteria, in the matching algorithms, or when resorting to different estimators.