DEEPER POCKETS, BETTER INVENTIONS?
EVIDENCE FROM FINANCIAL MARKET INTEGRATION
Access the current draft here.
This paper examines the impact of improved access to funding on firm-level patenting regarding a quantity-quality tradeoff. I exploit exogenous variation from the staggered introduction of major amendments to EU law to show that a relaxation of financing constraints induces the average firm to file more patents which are, however, of lower technological quality, market value, and impact on subsequent inventions. These results are mainly driven by firms with ex ante low patenting activities, in line with a disciplining effect of financing constraints. My results provide novel insights on the role of financial resources for firm-level inventions against the background of a recent political agenda.
BORROWING AGAINST THE (UN)KNOWN: PATENT PORTFOLIOS AND LEVERAGE
w/ Andrej Gill -- Access the current draft here.
This paper analyses the importance of intellectual property in determining capital structure decisions. By exploiting a change in EU-law, we causally show that larger and more valuable patent portfolios lead to higher debt-ratios. Furthermore, linking highly disaggregated patenting data to firms' financials allows us to document heterogeneous effects across industry and patent characteristics. Our results provide evidence that stronger intellectual property rights enforcement benefit innovation-intense firms that are financially constrained.
BORROWING ACTIVITIES DURING THE FINANCIAL CRISIS - SMES VERSUS LARGE FIRMS
w/ Øivind A. Nilsen -- Access the current draft on request.
This study investigates the effects of the Financial Crisis in the late 2000s on both SMEs' and large firms' borrowing activities. By utilizing high-quality data from official sources, we disentangle the evolution of demand and supply factors of firm-level borrowing activities over the course of the crisis. Contrasting theoretical predictions we find SME not to be affected by the crisis in a specifically pronounced manner. Our analyses suggests a general drop in loan demand as well as supply independent from firms' size. It is rather the availability of other funding sources and firms' riskiness that determine the degree of financing constraints. From a policy perspective, our results suggest that it is more efficient to address the underlying causes of (small) firms' vulnerability during economic slowdowns instead of trying to improve access to funding for SME in general.
FINANCIAL INTEGRATION, FINANCING CONSTRAINTS, AND INNOVATION IN EUROPE:
IS MORE BETTER?
w/ Uwe Walz & Jan Krzyzanowski -- Access the current draft on request.
A large number of policy initiatives in the European Union and its member states are grounded in the assumption that there is a gap between the demand and supply for financial resources to fund innovations. We approach this assumption by analysing not only how innovations are financed but also whether changes in the availability of funding affect the type and amount of inventions firms actually introduce to the market. In contrast to most existing studies, we focus on firms domiciled in Europe. For this purpose, different European policy initiatives are utilized to analyze the effects of firms’ access to finance on their patenting activities. To provide a comprehensive picture, two complementing initiatives are considered in a European context: i) policies which entailed a negative impact on firms’ access to external sources of finance (EBA capital exercise) as well as ii) those helping to mitigate financing constraints (FSAP). The findings indicate that more finance does not enhance innovative activity per se and less finance is not harmful for firms’ outcomes of their innovative activities by itself. Against the background of our results, we derive several policy recommendations.
PRELIMINARY RESEARCH PROJECTS
- VC funding and patent portfolios (w/ A. Gill & N. Gruzdov)
- A Historic Perspective on Competition and Innovation: Evidence from Cartels in the German Reich
(w/ M. Liebald & U. Walz)
- Real Effects of Discrimination - the Impact of Anti-Semitism during the 1930s on Inventive Output
(w/ M. Liebald & U. Walz)