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Credit Rationing in High-Tech firms and sample selection

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  • Gianfranco E. Atzeni
  • C. Piga

Abstract

We argue that it may be inappropriate to study whether high-tech firms are liquidity-constrained, without first 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 both the demand and the supply side. E.g., we find firms engaged in R&D to be less likely to request extra funds. When they do we observe a higher probability of being denied credit. Thus, our findings lend support to the notion of credit constraints being severe for innovative firms, although we suggest that other measures of innovative activity, in addition to total R&D expenditures, should be used to understand the occurrence of credit constraints in the high-tech sector.

Suggested Citation

  • Gianfranco E. Atzeni & C. Piga, 2003. "Credit Rationing in High-Tech firms and sample selection," Working Paper CRENoS 200304, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    • Handle: RePEc:cns:cnscwp:200304
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    Cited by:

    1. Guido Fioretti, 2005. "Credit Rationing and Internal Ratings in the face of Innovation and Uncertainty," Finance 0504021, University Library of Munich, Germany.

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    More about this item

    Keywords

    bivariate probit; innovation; selectivity;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing

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