Credit Rationing in High-Tech firms and sample selection

TitleCredit Rationing in High-Tech firms and sample selection
Publication TypeWorking Paper
Year of Publication2003
AuthorsAtzeni, GE, Piga, C
Keywordsbivariate probit, innovation, selectivity

We argue that it may be inappropriate to study whether high-tech firms are liquidity-constrained, without first 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 both the demand and the supply side. E.g., we find firms engaged in R&D to be less likely to request extra funds. When they do we observe a higher probability of being denied credit. Thus, our findings lend support to the notion of credit constraints being severe for innovative firms, although we suggest that other measures of innovative activity, in addition to total R&D expenditures, should be used to understand the occurrence of credit constraints in the high-tech sector.

Citation Key190
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