EconStor >
Verein für Socialpolitik >
Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/37156
  
Title:Information Externalities in Bank Based Financing for Private Innovation - Can Specialization Overcome Asymmetries? PDF Logo
Authors:Höwer, Daniel
Sofka, Wolfgang
Issue Date:2010
Series/Report no.:Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Empirical Studies on Innovation and Financial Constraints A9-V2
Abstract:Investments in R&D have been identified as a cornerstone for growth and competitive advantages of firms and whole economies. We investigate the role that a firm's main bank plays for its investment in R&D. Existing literature suggests that the inherent information asymmetries of R&D projects make them hardly applicable for bank lending. We challenge this assumption by arguing that banks are heterogeneous with regard to their information processing capabilities. They can benefit from information externalities arising from industry and geographical specialization in their overall loan portfolio. We combine finance as well as innovation management and economics literature to develop this argument. We test our theoretical framework for more than 7,500 firm observations in Germany and their R&D expenditures over a five year time period. A unique database allows us to construct the overall corporate client portfolio of the main bank for each of these firms. Our results show trade-offs in the degree and nature of bank specialization. Industry specialization of a firm's main bank has a u-shaped effect on its R&D investment. Regional specialization, though, has an inverse u-shaped effect. Recommendations on optimal firm-bank combinations for fostering R&D investment can be developed based on these results.
Subjects:Innovation
Banking
information asymmetries
micro-data
JEL:O32
D21
D82
Document Type:Conference Paper
Appears in Collections:Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie

Files in This Item:
File Description SizeFormat
VfS_2010_pid_369.pdf148.41 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/37156

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.