The Impact of the Financial Crisis on Investments in Innovative Firms

26 Pages Posted: 30 Sep 2015

See all articles by Marek Giebel

Marek Giebel

Copenhagen Business School - Department of Economics

Kornelius Kraft

University of Dortmund - Department of Economics; IZA Institute of Labor Economics

Date Written: September 2015

Abstract

This paper investigates the impact of the financial crisis on investment decisions in innovative versus non-innovative firms. Firms are defined as being innovative if they have introduced a new product to the market. The empirical test is based on data for the years before and after the recent financial crisis. Probit estimations show that innovative firms are more likely to suffer from the financial crisis and to reduce their investment expenditures in general. To some extent these reductions are due to problems in the acquisition of external capital. Using difference-in-differences methods, it turns out that innovative firms realize the same reduction in growth rates in turnover, but a stronger reduction in investment growth than non-innovative firms.

Keywords: Financial crisis, innovation, investment, credit constraints, difference-in-differences

JEL Classification: G01, G30, O16, O30

Suggested Citation

Giebel, Marek and Kraft, Kornelius, The Impact of the Financial Crisis on Investments in Innovative Firms (September 2015). ZEW - Centre for European Economic Research Discussion Paper No. 15-069, Available at SSRN: https://ssrn.com/abstract=2666595 or http://dx.doi.org/10.2139/ssrn.2666595

Marek Giebel

Copenhagen Business School - Department of Economics ( email )

Denmark

Kornelius Kraft (Contact Author)

University of Dortmund - Department of Economics ( email )

D-44221 Dortmund
Germany
+49 231 755-3152 (Phone)
+49 231 755-3155 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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