Credit constraints and R&D over the boom and bust: Firm-level evidence from Central and Eastern Europe

Kadri Männasoo and Jaanika Meriküll

Economic Systems, 2020, vol. 44, issue 2

Abstract: This paper studies the effect of credit constraints on R&D over the recent boom and bust episode in Central and Eastern European countries (CEECs). Given that financial and venture capital markets in CEECs are thin in comparison to those in high-income economies, it is proposed that credit constraints have a significant adverse effect on R&D activity in these countries. The paper uses three waves of Business Environment and Enterprise Performance Survey (BEEPS) data between 2005 and 2013 on manufacturing firms from ten CEECs. We find that credit constraints have a substantial effect on R&D engagement, as the probability of credit constrained firms undertaking R&D activities is around 30 % lower than for other firms. The adverse effect of credit constraints for R&D emerges during the years of fast economic growth.

Keywords: R&D; Credit constraints; The Great recession; Boom and bust; Central and Eastern Europe (search for similar items in EconPapers)
JEL-codes: E32 O16 O32 O52 P23 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:44:y:2020:i:2:s0939362520300236

DOI: 10.1016/j.ecosys.2020.100747

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