Does Bank Size Matter in Financing Small Business Innovation?

37 Pages Posted: 4 Nov 2013

See all articles by Lucia Dalla Pellegrina

Lucia Dalla Pellegrina

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS)

Serena Frazzoni

Zeno Rotondi

UNICREDIT; LUISS Guido Carli University

Andrea Vezzulli

UECE - Research Unit on Complexity in Economics

Date Written: November 2013

Abstract

Using data at the bank‐firm level for a large sample of small firms collected through the 8th UniCredit Survey conducted in 2011, we investigate the extent to which banks of different size reward more innovative firms, in terms of both access to lending and volume of credit granted. First we find that the status of innovative firm is associated with the possibility of being weakly credit‐rationed, as perceived by surveyed firms, while we do not observe any evidence of banks following strong credit‐rationing strategies. On the contrary, using instrumental variable techniques in order to manage the endogenous nature of innovation, we show that all types of banks reward firms' innovative activities. We also provide evidence that a large internationalized bank more strongly supports product innovation, whereas there is no substantial difference in the extent to which small and large banks provide credit to small firms undertaking process innovations.

Keywords: credit rationing, informed finance, innovative firms

JEL Classification: G21, L25, O31

Suggested Citation

Dalla Pellegrina, Lucia and Frazzoni, Serena and Rotondi, Zeno and Vezzulli, Andrea, Does Bank Size Matter in Financing Small Business Innovation? (November 2013). Baffi Center Research Paper No. 2013-142. Available at SSRN: https://ssrn.com/abstract=2349607 or http://dx.doi.org/10.2139/ssrn.2349607

Lucia Dalla Pellegrina (Contact Author)

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milan, 20126
Italy

Zeno Rotondi

UNICREDIT ( email )

VIA SPECCHI 16
ROME, 00186
Italy

HOME PAGE: http://docenti.luiss.it/rotondi

LUISS Guido Carli University ( email )

Via O. Tommasini 1
Rome, Roma 00100
Italy

Andrea Vezzulli

UECE - Research Unit on Complexity in Economics ( email )

ISEG/UTL, Rua Miguel Lupi 20
Lisboa, 1249-078
Portugal

HOME PAGE: http://pascal.iseg.utl.pt/~uece/peoplefellows.shtml

No contact information is available for Serena Frazzoni

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