Bank Credit Supply and Firm Innovation

31 Pages Posted: 2 Mar 2018

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: 2018

Abstract

We analyze the causal effect of the credit supply shock to banks induced by interbank market disruptions in the recent financial crisis 2008/2009 on their business customers’ innovation activity. Using a matched bank-firm data set for Germany, we find that having relations with a more severely affected bank seriously hampers firms’ current innovation activities due to funding shortages. Furthermore, we find that firms with a relationship to a less severely affected bank are more likely to initiate new product and process innovations and to reallocate human resources to innovation during the financial crisis.

Keywords: Financing of innovations, credit supply, financial crisis, innovative activities

JEL Classification: G01, G21, G30, O16, O30, O31

Suggested Citation

Giebel, Marek and Kraft, Kornelius, Bank Credit Supply and Firm Innovation (2018). ZEW - Centre for European Economic Research Discussion Paper No. 18-011, Available at SSRN: https://ssrn.com/abstract=3132358 or http://dx.doi.org/10.2139/ssrn.3132358

Marek Giebel (Contact Author)

Copenhagen Business School - Department of Economics ( email )

Denmark

Kornelius Kraft

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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