©2019 by davidheller.




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.


w/ Andrej Gill  -- Access the current draft here.

This paper analyses the importance of one specific type of intellectual property, patents, in determining capital structure decisions. We combine unique institutional features of the European patent system with granular firm- and patent-level data to track the size and value of firms' actively held patent stocks. By exploiting an exogenous shift in patent protection resulting from a change in EU-law, we causally show a positive effect of firms' patenting activities on debt-ratios. Our findings illustrate that this effect is driven by the underlying value of the actively held patent stock and not by the number of active patents or filings. Our setting allows documenting the role of industry, firm, and patent characteristics in this relationship, such as industry's propensity to patent, firms' degree of financial constraints, and the technological scope of patents. The results provide evidence that stronger intellectual property rights enforcement benefit innovation-intense firms that are financially constrained.


w/ Pantelis Karapanagiotis & Øivind A. Nilsen -- Access the current draft here.

This study investigates firms' financing conditions over the course of the Financial Crisis in the late 2000s on both SMEs' and large firms. By exploiting high quality, proprietary data from official sources on German firms, we quantify financing constraints based on observable firm characteristics. This way, we are able to study differential effects between small and large firms without depending on size as a measure of restrictiveness itself. We show that SME are on average more likely to face excess demand for bank loans as compared to large firms. Contrasting theoretical predictions, however, we further find that the crisis did not affect SME in a disproportionate manner. It is rather the availability of non-bank sources and firms' riskiness determining 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 enhancing access to funding for SME in general.



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.

Media coverage: here (EPO ARP Programm) 


- VC Funding and Patenting Activities (w/ A. Gill & N. Gruzdov)

- Brain Drain and Inventive Activities: Evidence from Discriminatory Policies in the Third Reich (w/ M. Liebald)