Do R&D Subsidies Affect SMEs' Access to External Financing?
41 Pages Posted: 29 Feb 2008
Abstract
Many countries spend sizeable sums of public money on R&D grants to alleviate debt and equity gaps for small firms' innovation projects. In making such awards, knowledgeable government officials may certify firms to private financiers. This paper investigates whether government subsidies to R&D enhance SMEs' access to external financing due to this certification effect. Using a unique Flemish dataset of 1107 approved requests and a control group of 501 denied requests for a specific type of R&D grant, we examine the impact on small firms' external equity, short term and long term debt financing. We find that obtaining a R&D subsidy provides a positive signal about SME quality and results in better access to long-term debt.
Keywords: R&D subsidies, government policy, SMEs, financial constraints, certification hypothesis, behavioural additionality
JEL Classification: G32, H25, O38
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Is Public R&D a Complement or Substitute for Private R&D? A Review of the Econometric Evidence
By Paul A. David, Bronwyn H. Hall, ...
-
The Impact of Corporate Restructuring on Industrial Research and Development
-
How Effective are Fiscal Incentives for R&D? a New Review of the Evidence
By Bronwyn H. Hall and John Van Reenen
-
An Empirical Evaluation of the Effects of R&D Subsidies
By Isabel Busom
-
Does Government R&D Policy Mainly Benefit Scientists and Engineers?
-
Do R&D Subsidies Stimulate or Displace Private R&D? Evidence from Israel
By Saul Lach
-
Public R&D Policies and Cost Behavior of the Us Manufacturing Industries