R&D Investment, Credit Rationing and Sample Selection

30 Pages Posted: 11 Apr 2007

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

Abstract

We study whether R&D-intensive firms are liquidity constrained, by modelling 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 firm`s probability of being credit constrained.

Suggested Citation

Piga, Claudio A. and Atzeni, Gianfranco Enrico, R&D Investment, Credit Rationing and Sample Selection. Bulletin of Economic Research, Vol. 59, No. 2, pp. 149-178, April 2007. Available at SSRN: https://ssrn.com/abstract=978546 or http://dx.doi.org/10.1111/j.0307-3378.2007.00255.x

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)

V. S. Ignazio 78
Cagliari, 09124
ITALY

Register to save articles to
your library

Register

Paper statistics

Downloads
23
Abstract Views
631
PlumX Metrics