R&d Investment, Credit Rationing and Sample Selection
Year: 2007
Type: article
Abstract: ABSTRACT We study whether R&D‐intensive firms are liquidity constrained, by modelling 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 firm's probability of being credit constrained.
Source: Bulletin of Economic Research
Authors: Claudio A. Piga, Gianfranco Atzeni
Institutions: Loughborough University, University of Sassari
Language: English
Topic: Firm Innovation and Growth
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3124176347