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Are Small Innovators Credit Rationed?

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Abstract

Drawing upon a sample of 256 small firms who applied for bank loans, the current paper is concerned with the extent to which ‘innovativeness’ is associated with a lower level of loan application success. The paper records the proportion of loan successfully applied for and estimates a series of tobit models utilising a number of proxy measures for innovation (in terms of inputs, outputs, and commercial significance to the firm) and incorporating standard controls. In general, the models suggest (as anticipated) that the most innovative firms are less successful in loan markets than their less innovative peers – though there is some variation by proxy. Moreover, there is tentative evidence that ‘a little innovation may be a good thing’.

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  1. School of Management, University of Ottowa, 136 Jean-Jacques Lussier Street, K1N 6N5 , Ottowa, ON, Canada

    Mark S. Freel

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  1. Mark S. Freel
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Correspondence to Mark S. Freel.

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Freel, M.S. Are Small Innovators Credit Rationed?. Small Bus Econ 28, 23–35 (2007). https://doi.org/10.1007/s11187-005-6058-6

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  • DOI: https://doi.org/10.1007/s11187-005-6058-6

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