R&D investment, Credit Rationing and Sample Selection

Gianfranco Enrico Atzeni () and Claudio Piga ()

Discussion Paper Series from Department of Economics, Loughborough University

Abstract: We study whether R&D-intensive firms are liquidity-constrained, by also 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 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 firms’ probability of being credit-constrained.

Keywords: Bivariate Probit; Innovation; selectivity; in-house R&D. (search for similar items in EconPapers)
JEL-codes: D45 G21 G32 E51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ent, nep-fin, nep-fmk, nep-mac and nep-mic
Date: 2005-06, Revised 2005-06
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http://www.lboro.ac.uk/departments/ec/RePEc/lbo/lbowps/piga2005wps6.pdf

Related works:
Journal Article: R&D INVESTMENT, CREDIT RATIONING AND SAMPLE SELECTION (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:lbo:lbowps:2005_6

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