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  • Maria Luisa Mancusi,

    1. Department of Economics and Finance, Università Cattolica del Sacro Cuore, 20123 Milano, Italy
    2. CRIOS, Bocconi University, 20136 Milano, Italy
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  • Andrea Vezzulli

    1. CRIOS, Bocconi University, 20136 Milano, Italy
    2. UECE–Research Unit on Complexity and Economics, 1249-078 Lisboa, Portugal
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    • An earlier version of this paper was previously circulated as “R&D, Innovation and Liquidity Constraints.” We thank M. Bratti, V. Cerasi, L. Colombo, D. Czarnitzki, T. Duso, P. Epifani, A. Gambardella, B. Hall, H. Hottenrott, J. Mairesse, P. Murro, G. Peri, O. Toivanen, J. Tribò, and R. Veugelers for their useful discussions and suggestions, as well as seminar participants at Polytechnic of Turin, University of Valencia, Universidad Autonoma de Barcelona, École Polytechnique, UECE-ISEG, University of Siena, University of Bologna, Bocconi University (seminar series on “Global Challenges”), and participants to EARIE 2011, ICEEE 2011, CONCORD 2010, SIE 2010, EARIE 2009, JEI 2009, and FIRB-RISC 2009. We also thank C. Cozza and G. Perani for providing us supplementary R&D data matching our survey and R. Minetti for sharing the set of instruments employed by Herrera and Minetti (2007). Financial support from MIUR, Italian Ministry for Education, Universities and Research (FIRB, Project RISC - RBNE039XKA: “Research and entrepreneurship in the knowledge-based economy: the effects on the competitiveness of Italy in the European Union”), and by FCT (Fundação para a Ciência e a Tecnologia), Portugal, are gratefully acknowledged. The usual disclaimer applies.


We study the effects of credit rationing on research and development (R&D) investment using survey and accounting data on a large representative sample of manufacturing small- and medium-sized enterprises (SMEs). Our econometric model accounts for the endogeneity of our credit rationing indicator and employs an innovative theory-based identification strategy. We find that credit rationing has a significantly negative effect on both the probability to set up R&D activities and on the level of R&D spending (conditioned on the R&D decision), but the overall estimated reduction in R&D spending is largely to be associated with the first effect. (JEL G21, D82, O32, C35)