Bank credit supply and firm innovation
Marek Giebel and
No 18-011, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research
We analyze the causal effect of the credit supply shock to banks induced by interbank market disruptions in the recent financial crisis 2008/2009 on their business customers' innovation activity. Using a matched bank-firm data set for Germany, we find that having relations with a more severely affected bank seriously hampers firms' current innovation activities due to funding shortages. Furthermore, we find that firms with a relationship to a less severely affected bank are more likely to initiate new product and process innovations and to reallocate human resources to innovation during the financial crisis.
Keywords: financing of innovations; credit supply; financial crisis; innovative activities (search for similar items in EconPapers)
JEL-codes: G01 G21 G30 O16 O30 O31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-bec, nep-cfn, nep-com, nep-ent, nep-ino, nep-sbm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:18011
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