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Journal Articles Small Business Economics Year : 2023

SMEs, R &D financing, and credit shocks

Pietro Grandi
  • Function : Author
Elisa Darriet
  • Function : Author
Marianne Guille
  • Function : Author


We study how young and small firms’ R &D investment responds to the tightening of credit conditions. Using detailed R &D information on over 25,000 French companies, we show that financially constrained firms were relatively more likely to scale back their R &D activities during the European sovereign debt crisis (2010–2012), in particular those related to fundamental research. We then exploit variation in the sovereign risk exposure of firms’ main bank during the sovereign debt crisis as an exogenous credit supply shock. Results indicate that firms related to banks with larger exposures to risky sovereign debt decreased R &D expenditure by more relative to other firms following the crisis. Our findings indicate that credit supply shocks have significant impact on firms’ R &D activities, especially for SMEs and young firms, and highlight an important transmission channel of sovereign risk to firm innovation and productivity.


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Dates and versions

hal-04285131 , version 1 (14-11-2023)



Pietro Grandi, Jean Belin, Elisa Darriet, Marianne Guille. SMEs, R &D financing, and credit shocks. Small Business Economics, 2023, ⟨10.1007/s11187-023-00814-x⟩. ⟨hal-04285131⟩


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