R&D Investment, Credit Rationing and Sample Selection

21 Pages Posted: 1 Jun 2006

See all articles by Claudio A. Piga

Claudio A. Piga

Keele University - Keele Management School

Gianfranco Enrico Atzeni

University of Sassari - Dip.to di Economia Impresa e Regolamentazione; Universita di Cagliari - Centre for North South Economic Research (CRENOS)

Multiple version iconThere are 2 versions of this paper

Date Written: June 2005

Abstract

We study whether R&D-intensive firms are liquidity-constrained, by also modeling their antecedent decision to apply for credit. This sample selection issue is relevant when studying a borrower-lender relationship, as the same factors can influence the decisions of both parties. We find firms with no or low R&D intensity to be less likely to request extra funds. When they do, we observe a higher probability of being denied credit. Such a relationship is not supported by evidence from the R&D-intensive firms. Thus, our findings lend support to the notion of credit constraints being severe only for a sub-sample of innovative firms. Furthermore, the results suggest that the way in which the R&D activity is organized may differentially affect a firms' probability of being credit-constrained.

Keywords: Bivariate Probit, Innovation, selectivity, in-house R&D

JEL Classification: D45, G21, G32, E51

Suggested Citation

Piga, Claudio A. and Atzeni, Gianfranco Enrico, R&D Investment, Credit Rationing and Sample Selection (June 2005). Available at SSRN: https://ssrn.com/abstract=905536 or http://dx.doi.org/10.2139/ssrn.905536

Claudio A. Piga (Contact Author)

Keele University - Keele Management School ( email )

Darwin Building
Staffordshire, ST5 5BG
United Kingdom

Gianfranco Enrico Atzeni

University of Sassari - Dip.to di Economia Impresa e Regolamentazione ( email )

Viale Regina Margherita 15
07100 Sassari
Italy
39-079-228939 (Phone)

Universita di Cagliari - Centre for North South Economic Research (CRENOS) ( email )

V. S. Ignazio 78
Cagliari, 09124
Italy

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