R&D Investments under Financing Constraints

Marek Giebel, Kornelius Kraft

Research output: Working paperResearch


This paper tests for the sensitivity of R&D to financing constraints conditional on restrictions in external financing. Financing constraints of firms are identified by an exogenously calculated rating index. Restrictions in external financing are determined by (i) the specific time period (crisis vs. non-crisis) and (ii) the balance sheet strength of the firm’s main bank in terms of bank capital. Results of difference-in-differences estimations utilizing three time periods: 2002-2006 (pre-crisis) 2007-2009 (crisis) and 2010-2012 (post-crisis) support the theoretical prediction that financing constraints affect R&D. Moreover, we find that the effect of firm financing constraints is more intense (i) in times of stress on financial markets and (ii) when the firm faces restrictions in external financing. Additionally, our results indicate that on average the effect does not persist over time.
Original languageEnglish
Place of PublicationMannheim
PublisherLeibnitz Centre for European Economic Research (ZEW)
Number of pages52
Publication statusPublished - Apr 2020
Externally publishedYes
SeriesZEW Discussion Papers


  • R&D investment
  • Financing constraints
  • Credit rating
  • Financial crisis
  • Bank capital
  • External financing of innovation

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