Relationship Lending and Firm Innovativeness

CentER Discussion Paper Series No. 2009-08

TILEC Discussion Paper No. 2009-002

43 Pages Posted: 26 Jan 2009 Last revised: 23 Oct 2014

See all articles by Caterina Giannetti

Caterina Giannetti

University of Jena; University of Bologna - Department of Economics

Date Written: January 25, 2009


This study investigates the effects of relationship lending on firm innovativeness using a panel of Italian manufacturing firms. In order to disentangle the impact of bank ties on the discovery phase from that in the introduction phase of new technologies, the analysis proceeds in two steps, estimating two distinct equations for each phase. As there are conflicting theoretical predictions on the effects of the various sources of funding in the different stages of the innovative process, this study provides results for small and high-tech firms, so as to control for firm heterogeneity, relying on both cross-section and panel data techniques. Results suggest that for small firms, banks do not carry out a sophisticated intervention at the stage of development of new technologies, playing their traditional role of financing investments of constrained firms. Differently, relationship banks do play an important role in both phases for high-tech firms.

Keywords: Credit relationship, external financing, bank competition

JEL Classification: C34, G21, O31

Suggested Citation

Giannetti, Caterina, Relationship Lending and Firm Innovativeness (January 25, 2009). CentER Discussion Paper Series No. 2009-08, TILEC Discussion Paper No. 2009-002, Available at SSRN: or

Caterina Giannetti (Contact Author)

University of Jena ( email )

Furstengraben 1
Jena, Thuringa 07743

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125

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