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.
|Date of creation:||2012|
|Date of revision:|
|Publication status:||Published in Journal of the European Economic Association|
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