Credit Rationing in High-Tech firms and sample selection

Gianfranco Enrico Atzeni () and Claudio Piga ()

Working Paper CRENoS from Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia

Abstract:

We argue that it may be inappropriate to study whether high-tech firms are liquidity-constrained, without first 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 both the demand and the supply side. E.g., we find firms engaged in R&D to be less likely to request extra funds. When they do we observe a higher probability of being denied credit. Thus, our findings lend support to the notion of credit constraints being severe for innovative firms, although we suggest that other measures of innovative activity, in addition to total R&D expenditures, should be used to understand the occurrence of credit constraints in the high-tech sector.

Keywords: Bivariate Probit; Innovation; selectivity; in-house R&D. (search for similar items in EconPapers)
JEL-codes: D45 G21 E51 G32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn and nep-ent
Date: Written
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Persistent link: http://EconPapers.repec.org/RePEc:cns:cnscwp:200304

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