2134/587
Gianfranco Atzeni
Gianfranco
Atzeni
Claudio Piga
Claudio
Piga
R&D investment, credit rationing and sample selection.
Loughborough University
2005
Bivariate probit
Innovation
Selectivity
In-house R&D
Economics not elsewhere classified
2005-11-21 14:37:30
Preprint
https://repository.lboro.ac.uk/articles/preprint/R_D_investment_credit_rationing_and_sample_selection_/9492833
We study whether R&D-intensive firms are liquidity-constrained, by also 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 the decisions of both parties. We find firms with no or low R&D intensity to be less likely to request extra funds. When they do, we observe a higher probability of being denied credit. Such a relationship is not supported by evidence from the R&D-intensive firms. Thus, our findings lend support to the notion of credit constraints being severe only for a sub-sample of innovative firms. Furthermore, the results suggest that the way in which the R&D activity is organized may differentially affect a firms’ probability of being credit-constrained.