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Can Direct Innovation Subsidies Relax SMEs' Credit Constraints?

Author

Listed:
  • Raphaël Chiappini

    (Université de Bordeaux
    LAREFI)

  • Samira Demaria

    (Université Côte d'Azur, France
    GREDEG CNRS)

  • Benjamin Montmartin

    (SKEMA Business School
    Université Côte d'Azur, France)

  • Sophie Pommet

    (Université Côte d'Azur, France
    GREDEG CNRS)

Abstract

Credit constraints hamper the ability of SMEs to undertake innovative activities. Promoting access to external funding for SMEs represents therefore an important challenge for policymakers. This paper investigates whether innovation subsidies provided by the French public investment bank to SMEs have translated into better access to bank and other external financing through an indirect certification effect. We exploit a unique database covering the period 2000-2010 to construct a quasi-natural experiment and evaluate the causal impact of these subsidies on SMEs' financial constraints. If we find a significant improvement in the access to bank financing for subsidized firms, the effect is heterogeneous and mainly concentrated on small firms operating in high-tech sectors. Moreover, such public support does not seem to improve the access to other external sources of financing which can be explained by the low development risk-capital markets in France.

Suggested Citation

  • Raphaël Chiappini & Samira Demaria & Benjamin Montmartin & Sophie Pommet, 2020. "Can Direct Innovation Subsidies Relax SMEs' Credit Constraints?," GREDEG Working Papers 2020-09, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    • Handle: RePEc:gre:wpaper:2020-09
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    More about this item

    Keywords

    Credit constraints; innovation policy; certification effect; Mahalanobis distance matching; difference-in difference;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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