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Do financial constraints make the environment worse off? Understanding the effects of financial barriers on environmental innovations

Author

Listed:
  • Claudia Ghisetti

    (Department of Economics and Management, University of Ferrara, Italy.)

  • Massimiliano Mazzanti

    (Deptartment of Economics and Management. University of Ferrara, Italy.)

  • Susanna Mancinelli

    (Deptartment of Economics and Management. University of Ferrara, Italy.)

  • Mariangela Zoli

    (Università di Roma Tor Vergata, Italy.)

Abstract

We analyse the role of financial barriers behind the adoption of environmental innovations with a focus on SMEs by using recent survey data at EU level. Finance is a key lever of innovation, especially relevant in the current phase of the economic cycle, and might play a critical role in defining green economy directions. Empirical analyses confirm financial barriers as a deterrent for the innovative capacity of EU firms. This is true for the economy as a whole, and for manufacturing firms taken alone. Being smaller and having a low amount of human capital in the firm also hampers environmental innovations . On the ‘positive’ side, we note that existing regulations and expected increasing demand for green products both support EI adoption. Financial barriers are perceived by firms and influenced by technological lock-ins, uncertainty in investments, non-competitive markets, and a lack of subsidies. We observe that the ‘deterrent barrier hypothesis’, alternative to the ‘revealed barrier hypothesis’, is not rejected here, as in recent analyses of traditional innovations: perceived financial constraints deter innovative strategies.

Suggested Citation

  • Claudia Ghisetti & Massimiliano Mazzanti & Susanna Mancinelli & Mariangela Zoli, 2015. "Do financial constraints make the environment worse off? Understanding the effects of financial barriers on environmental innovations," SEEDS Working Papers 0115, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Jan 2015.
  • Handle: RePEc:srt:wpaper:0115
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    References listed on IDEAS

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    Cited by:

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    2. Perruchas, François & Consoli, Davide & Barbieri, Nicolò, 2020. "Specialisation, diversification and the ladder of green technology development," Research Policy, Elsevier, vol. 49(3).
    3. Pinget, Amandine, 2016. "Spécificités des déterminants des innovations environnementales : une approche appliquée aux PME [Specificities of determinants for environmental innovation : an approach applied to SMEs]," MPRA Paper 80108, University Library of Munich, Germany.
    4. Amandine Pinget & Rachel Bocquet & Caroline Mothe, 2015. "Barriers to Environmental Innovation in SMEs: Empirical Evidence from French Firms," Post-Print hal-01300837, HAL.
    5. Lorenzo Esposito & Ettore Giuseppe Gatti & Giuseppe Mastromatteo, 2019. "Sustainable finance, the good, the bad and the ugly: a critical assessment of the EU institutional framework for the green transition," DISCE - Quaderni del Dipartimento di Politica Economica dipe0004, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    6. Yu, Chin-Hsien & Wu, Xiuqin & Zhang, Dayong & Chen, Shi & Zhao, Jinsong, 2021. "Demand for green finance: Resolving financing constraints on green innovation in China," Energy Policy, Elsevier, vol. 153(C).
    7. Casini, Paolo & Valentini, Edilio, 2019. "Emissions Markets with Price Stabilizing Mechanisms: Possible Unpleasant Outcomes," ES: Economics for Sustainability 291801, Fondazione Eni Enrico Mattei (FEEM) > ES: Economics for Sustainability.
    8. Alessandro Spiganti & David Comerford, 2017. "The Carbon Bubble: Climate Policy in a Fire-sale Model of Deleveraging," 2017 Meeting Papers 734, Society for Economic Dynamics.
    9. Horbach, Jens, 2016. "The impact of resource efficiency measures on performance in small and medium-sized enterprises," Ruhr Economic Papers 643, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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    More about this item

    Keywords

    Environmental innovations; Financial barriers; Firms; Environmental Regulations;
    All these keywords.

    JEL classification:

    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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