Innovative investments, financial imperfections, and the Italian business cycle

Daniela Bragoli, Flavia Cortelezzi, Giovanni Marseguerra and Massimiliano Rigon ()

Oxford Economic Papers, 2020, vol. 72, issue 2, 412-434

Abstract: We analyse empirically the relationship between financial imperfections and firms’ innovative activities over the business cycle, using an Italian firm-level dataset based on survey data on innovation and balance sheet information over the period 2004–10. We explore how innovative investment decisions changed prior to and after the credit crunch of 2008, also focusing on the effect of firm’ financial vulnerability measured by the Whited and Wu (2006) index (WW index). Results show that the link between innovative expenditure patterns and the business cycle is very weak in the absence of credit restrictions and financial vulnerability. The crisis, per se, and the financial vulnerability, per se, do not change this weak relation. The latter becomes highly pro-cyclical only in one case: when firms are financially vulnerable and have to face tight credit conditions.

JEL-codes: E22 E32 O16 O30 O32 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1093/oep/gpz017 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:oxecpp:v:72:y:2020:i:2:p:412-434.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Oxford Economic Papers is currently edited by James Forder and Francis J. Teal

More articles in Oxford Economic Papers from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().