Do Bank Loans to Financially Distressed Firms Lead to Innovation?
Minjung Kim and
Jungsoo Park ()
Additional contact information
Minjung Kim: Sogang University
The Japanese Economic Review, 2017, vol. 68, issue 2, No 9, 244-256
Abstract This study scrutinizes the association between a bank loan to a financially distressed firm and technological innovation. Using probit model estimations based on a comprehensive Korean manufacturing firm-level data set on innovation and bank loans, we first find that a bank loan to a troubled firm with a weak incentive system has no or little effect on innovation. Second, beneficial effects on innovation are observed when the firm has a strong incentive-based pay system. Third, financially distressed firms with strong incentive systems pursue product innovation rather than process innovation. Finally, the innovation performance of these firms strengthens with more stable financing.
Keywords: O31; G21 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1111/jere.12131 Abstract (text/html)
Access to the full text of the articles in this series is restricted.
Journal Article: Do Bank Loans To Financially Distressed Firms Lead To Innovation? (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:spr:jecrev:v:68:y:2017:i:2:d:10.1111_jere.12131
Ordering information: This journal article can be ordered from
Access Statistics for this article
The Japanese Economic Review is currently edited by Michihiro Kandori
More articles in The Japanese Economic Review from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().