Arbeitspapier
Did bank lending stifle innovation in Europe during the great recession?
Using the 2008-09 Global financial crisis and the 2012 Euro area sovereign debt crisis as natural experiments, we investigate the effects of contractions in credit supply on R&D spending in a large sample of European firms. Our identification strategy exploits differences in financial constraints across firms, as well as the cross-industry variation in dependence on external finance, to identify a causal effect of bank credit supply on firm investment in innovation. We show that firms that are more likely financially constrained, in industries more dependent on external finance, have a disproportionally lower growth rate of R&D spending, as well as lower R&D intensity and share of R&D investment in total investment during periods of tight credit supply. These results are robust to different proxies of financial constraints, model specifications and fixed-effects identification strategies.
- Language
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Englisch
- Bibliographic citation
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Series: UCD Centre for Economic Research Working Paper Series ; No. WP19/26
- Classification
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Wirtschaft
Innovation; Research and Development; Technological Change; Intellectual Property Rights: General
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Educational Finance; Financial Aid
- Subject
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financial frictions
investment
innovation
R&D spending
- Event
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Geistige Schöpfung
- (who)
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Peia, Oana
Romelli, Davide
- Event
-
Veröffentlichung
- (who)
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University College Dublin, UCD Centre for Economic Research
- (where)
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Dublin
- (when)
-
2019
- Handle
- Last update
-
10.03.2025, 11:41 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Peia, Oana
- Romelli, Davide
- University College Dublin, UCD Centre for Economic Research
Time of origin
- 2019
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