R&D investment under financing constraints

Arbeitspapier

This paper tests for the sensitivity of R&D to financing constraints conditional on restrictions in external financing. Financing constraints of firms are identified by an exogenously calculated rating index. Restrictions in external financing are determined by (i) the specific time period (crisis vs. non-crisis) and (ii) the balance sheet strength of the firm's main bank in terms of bank capital. Results of difference-in-differences estimations utilizing three time periods: 2002-2006 (pre-crisis) 2007-2009 (crisis) and 2010-2012 (post-crisis) support the theoretical prediction that financing constraints affect R&D. Moreover, we find that the effect of firm financing constraints is more intense (i) in times of stress on financial markets and (ii) when the firm faces restrictions in external financing. Additionally, our results indicate that on average the effect does not persist over time.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ZEW Discussion Papers ; No. 20-018

Classification and Topics

• Classification: Wirtschaft ; Financial Crises ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies ; Corporate Finance and Governance: General ; Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance ; Innovation; Research and Development; Technological Change; Intellectual Property Rights: General ; Innovation and Invention: Processes and Incentives ; Management of Technological Innovation and R&D
• Subject: R&D investment ; financing constraints ; credit rating ; financial crisis ; bank capital ; external financing of innovation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Giebel, Marek ; Kraft, Kornelius
• Event: Veröffentlichung
• (who): ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
• (where): Mannheim
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/215677
• Last update: 13.03.2025, 9:53 AM CET