The Limits of Lending: Banks and Technology Adoption Across Russia

We exploit historical and contemporaneous variation in local credit markets across Russia to identify the impact of credit constraints on firm-level innovation. We find that access to bank credit helps firms to adopt existing products and production processes that are new to them. They introduce these technologies either with the help of suppliers and clients or by acquiring external know-how. We find no evidence that bank credit also stimulates firm innovation through in-house R&D. This suggests that banks can facilitate the diffusion of technologies within developing countries but that their role in pushing the technological frontier is limited.

Keywords: credit constraints, firm innovation, technological change

JEL Classification: D220, F630, G210, O120, O310

Suggested Citation: Suggested Citation

Bircan, Cagatay and De Haas, Ralph, The Limits of Lending: Banks and Technology Adoption Across Russia (July 31, 2015). CESifo Working Paper Series No. 5461, Available at SSRN: https://ssrn.com/abstract=2639610 or http://dx.doi.org/10.2139/ssrn.2639610