Did bank lending stifle innovation in Europe during the Great Recession?

Files in This Item:
File Description SizeFormat 
WP19_26.pdf594.95 kBAdobe PDFDownload
Title: Did bank lending stifle innovation in Europe during the Great Recession?
Authors: Peia, OanaRomelli, Davide
Permanent link: http://hdl.handle.net/10197/11198
Date: Nov-2019
Online since: 2019-11-14T12:02:45Z
Abstract: Using the 2008-09 Global Financial crisis and the 2012 Euro area sovereign debt crisis as natural experiments, we investigate the effects of contractions in credit supply on R&D spending in a large sample of European firms. Our identification strategy exploits differences in financial constraints across firms, as well as the cross-industry variation in dependence on external finance, to identify a causal effect of bank credit supply on firm investment in innovation. We show that firms that are more likely financially constrained, in industries more dependent on external finance, have a disproportionally lower growth rate of R&D spending, as well as lower R&D intensity and share of R&D investment in total investment during periods of tight credit supply. These results are robust to different proxies of financial constraints, model specifications and fixed-effects identification strategies.
Type of material: Working Paper
Publisher: University College Dublin. School of Economics
Start page: 1
End page: 38
Series/Report no.: UCD Centre for Economic Research Working Paper Series; WP2019/26
Copyright (published version): 2019 the Authors
Keywords: Financial frictionsInvestmentInnovationR&D spending
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Economics Working Papers & Policy Papers

Show full item record

Page view(s)

Last Week
Last month
checked on Feb 25, 2020


checked on Feb 25, 2020

Google ScholarTM


This item is available under the Attribution-NonCommercial-NoDerivs 3.0 Ireland. No item may be reproduced for commercial purposes. For other possible restrictions on use please refer to the publisher's URL where this is made available, or to notes contained in the item itself. Other terms may apply.