How do banks finance R&D intensive firms? the role of patents in overcoming information asymmetry✰

Arvid O.I. Hoffmann and Stefanie Kleimeier

Finance Research Letters, 2021, vol. 38, issue C

Abstract: We examine how banks finance R&D intensive firms, focusing on the role of patents in overcoming information asymmetry in bank lending. Consistent with moral hazard in due diligence and monitoring, we find that lead arrangers retain a larger share of syndicated loans when lending to R&D intensive firms. Patents can partly overcome moral hazard problems, as banks retain a smaller share of R&D intensive firms’ loans if these firms have patents as a signal of the quality of their inventions. Our results are robust to alternative explanatory variable definitions and syndicate structure measures, different samples and subperiods, and difference-in-difference estimations.

Keywords: Syndicated loan; Lead arranger; Innovation; Patent; Information asymmetry; Moral hazard (search for similar items in EconPapers)
JEL-codes: G21 G32 O32 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:38:y:2021:i:c:s1544612319308177

DOI: 10.1016/j.frl.2020.101485

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