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R&D investment, credit rationing and sample selection.

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posted on 21.11.2005, 14:37 by Gianfranco Atzeni, Claudio Piga
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.

History

School

  • Business and Economics

Department

  • Economics

Pages

282196 bytes

Publication date

2005-06

Notes

This is a working paper.

Language

en

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