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Can Direct Innovation Subsidies Relax SMEs' Credit Constraints?

Raphaël Chiappini (), Samira Demaria, Benjamin Montmartin () and Sophie Pommet
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Samira Demaria: Université Côte d'Azur, France

No 2020-09, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France

Abstract: Credit constraints hamper the ability of SMEs to undertake innovative activities. Promoting access to external funding for SMEs represents therefore an important challenge for policymakers. This paper investigates whether innovation subsidies provided by the French public investment bank to SMEs have translated into better access to bank and other external financing through an indirect certification effect. We exploit a unique database covering the period 2000-2010 to construct a quasi-natural experiment and evaluate the causal impact of these subsidies on SMEs' financial constraints. If we find a significant improvement in the access to bank financing for subsidized firms, the effect is heterogeneous and mainly concentrated on small firms operating in high-tech sectors. Moreover, such public support does not seem to improve the access to other external sources of financing which can be explained by the low development risk-capital markets in France.

Keywords: Credit constraints; innovation policy; certification effect; Mahalanobis distance matching; difference-in difference (search for similar items in EconPapers)
JEL-codes: O33 O38 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2020-03
New Economics Papers: this item is included in nep-cfn, nep-ent, nep-eur, nep-fdg, nep-ino, nep-sbm and nep-tid
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