The financing of innovative firms

Bronwyn Hall

No 8/2009, EIB Papers from European Investment Bank, Economics Department

Abstract: To what extent are new and/or innovative firms fundamentally different from established firms, and therefore require a different form of financing? The theoretical background for this proposition is presented, and the empirical evidence on its importance is reviewed. Owing to the intangible nature of their investment, asymmetric-information and moral-hazard, these firms are more likely to be financed by equity than debt and behave in some cases as though they are cash-constrained, especially if they are small. Recognising the role for public policy in this area, many countries have implemented specific policies to bring the cost of financing innovation more in line with the level that would prevail in the absence of market failures.

Keywords: R&D; innovation; financing; liquidity constraints; venture capital (search for similar items in EconPapers)
JEL-codes: G24 G32 O32 O38 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2009-12-23
New Economics Papers: this item is included in nep-cfn, nep-com, nep-ent, nep-ino and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (43)

Downloads: (external link)
http://www.eib.org/attachments/efs/eibpapers/eibpa ... 4_n02_en.pdf#page=10 Full text (application/pdf)

Related works:
Journal Article: The Financing of Innovative Firms (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:eibpap:2009_008

Access Statistics for this paper

More papers in EIB Papers from European Investment Bank, Economics Department Contact information at EDIRC.
Bibliographic data for series maintained by Polyxeni Kanelliadou ().