 Funding innovation and the regulatory environment – The role of employment protection legislationAndrea Moro, Daniela Maresch, Annalisa Ferrando and Gregory F. Udell Journal of Business Research, 2022, vol. 145, issue C, 745-756 Abstract: Access to external finance is essential for firms to engage in innovation processes and to grow. The regulatory environment plays a vital role in facilitating this access. We explore the role of employment protection legislation in the probability that firms obtain bank credit. We propose that restrictions on structuring employees’ work schedules and dismissing employees reduce access to credit by increasing the credit risk incurred by lenders. Our findings are based on 21,332 observations (European Central Bank SAFE dataset and World Bank Doing Business dataset) and reveal that a higher level of employment protection legislation is negatively related to the probability of firms obtaining bank credit. These results are robust to confounding, endogeneity, and selection bias, as well as to alternative specifications. Keywords: Innovation management; Access to finance; Institutional environment; Employment protection legislation; Labor market regulation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:145:y:2022:i:c:p:745-756 DOI: 10.1016/j.jbusres.2022.03.042 Access Statistics for this article Journal of Business Research is currently edited by A. G. Woodside More articles in Journal of Business Research from Elsevier |
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