Relationship Lending and Firm Innovativeness

C. Giannetti

Research output: Working paperDiscussion paperOther research output

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Abstract

This study investigates the effects of relationship lending on firm innovativeness using a panel of Italian manufacturing firms. In order to disentangle the impact of bank ties on the discovery phase from that in the introduction phase of new technologies, the analysis proceeds in two steps, estimating two distinct equations for each phase. As there are conflicting theoretical predictions on the effects of the various sources of funding in the different stages of the innovative process, this study provides results for small and high-tech firms, so as to control for firm heterogeneity, relying on both cross-section and panel data techniques. Results suggest that for small firms, banks do not carry out a sophisticated intervention at the stage of development of new technologies, playing their traditional role of financing investments of constrained firms. Differently, relationship banks do play an important role in both phases for high-tech firms.
Original languageEnglish
Place of PublicationTilburg
PublisherFinance
Number of pages43
Volume2009-08
Publication statusPublished - 2009

Publication series

NameCentER Discussion Paper
Volume2009-08

Fingerprint

Relationship lending
Innovativeness
High-tech firms
Manufacturing firms
Financing
Prediction
Firm heterogeneity
Bank relationships
Small firms
Stages of development
Cross section
Innovative process
Funding
Panel data

Keywords

  • Credit relationship
  • external financing
  • bank competition

Cite this

Giannetti, C. (2009). Relationship Lending and Firm Innovativeness. (CentER Discussion Paper; Vol. 2009-08). Tilburg: Finance.
Giannetti, C. / Relationship Lending and Firm Innovativeness. Tilburg : Finance, 2009. (CentER Discussion Paper).
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Giannetti, C 2009 'Relationship Lending and Firm Innovativeness' CentER Discussion Paper, vol. 2009-08, Finance, Tilburg.

Relationship Lending and Firm Innovativeness. / Giannetti, C.

Tilburg : Finance, 2009. (CentER Discussion Paper; Vol. 2009-08).

Research output: Working paperDiscussion paperOther research output

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N2 - This study investigates the effects of relationship lending on firm innovativeness using a panel of Italian manufacturing firms. In order to disentangle the impact of bank ties on the discovery phase from that in the introduction phase of new technologies, the analysis proceeds in two steps, estimating two distinct equations for each phase. As there are conflicting theoretical predictions on the effects of the various sources of funding in the different stages of the innovative process, this study provides results for small and high-tech firms, so as to control for firm heterogeneity, relying on both cross-section and panel data techniques. Results suggest that for small firms, banks do not carry out a sophisticated intervention at the stage of development of new technologies, playing their traditional role of financing investments of constrained firms. Differently, relationship banks do play an important role in both phases for high-tech firms.

AB - This study investigates the effects of relationship lending on firm innovativeness using a panel of Italian manufacturing firms. In order to disentangle the impact of bank ties on the discovery phase from that in the introduction phase of new technologies, the analysis proceeds in two steps, estimating two distinct equations for each phase. As there are conflicting theoretical predictions on the effects of the various sources of funding in the different stages of the innovative process, this study provides results for small and high-tech firms, so as to control for firm heterogeneity, relying on both cross-section and panel data techniques. Results suggest that for small firms, banks do not carry out a sophisticated intervention at the stage of development of new technologies, playing their traditional role of financing investments of constrained firms. Differently, relationship banks do play an important role in both phases for high-tech firms.

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KW - bank competition

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Giannetti C. Relationship Lending and Firm Innovativeness. Tilburg: Finance. 2009. (CentER Discussion Paper).