Basel II and the Financing of R&D Investments

Giuseppe Scellato and Elisa Ughetto ()
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Giuseppe Scellato: Collegio Carlo Alberto
Elisa Ughetto: Collegio Carlo Alberto

Chapter Chapter 6 in The Banks and the Italian Economy, 2009, pp 135-159 from Springer

Abstract: Abstract In this chapter, we investigate the issue of the financing of R&D investments in SMEs in Italy with respect to the future changes in the banking system, which will be driven by the adoption of the new version of the Basel Capital Accord scheduled to be implemented after 2006. The study is based on firm-level data from the Mediocredito survey (2004). Our empirical analysis is twofold: first, we implement a probit model in order to observe if both indicators of product/process innovation and R&D intensity exert a significant impact on the needs of external financial resources. We then perform a simulation on the potential impacts that the adoption of the Basel II capital requirements by Italian banks might have on lending conditions to small and medium enterprises involved in product innovation. The results highlight that, when pooling all SMEs included in our sample, lending conditions turn out to be unaffected by the introduction of the Basel II Accord. However, when focusing on the sub-sample of companies involved in product innovation a higher cost of capital might emerge as a consequence of the higher expected capital requirements for the lending institutions.

Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-7908-2112-3_7

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DOI: 10.1007/978-3-7908-2112-3_7

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