Loan availability and investment: Can innovative companies better cope with loan denials?
Elisabeth Mueller () and
No 10-025, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research
This study examines the consequences of loan denials for the investment performance of small and medium-sized German enterprises. As a consequence of a loan denial, innovative companies experience a smaller drop in the share of actual to planned investment than non-innovative companies. The non-randomness of loan denials is controlled for with a selection equation employing the intensity of banking competition at the district level as an exclusion restriction. We can explain the better performance of innovative companies by their ability to increase the use of external equity financing, such as venture capital or mezzanine capital, when facing a loan denial.
Keywords: Investment; loan availability; innovation; private equity (search for similar items in EconPapers)
JEL-codes: G21 G31 O32 (search for similar items in EconPapers)
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Journal Article: Loan availability and investment: can innovative companies better cope with loan denials? (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:10025
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