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Do R&D subsidies affect SME's: access to external financing
Meuleman, Miguel De Maeseneire, Wouter
Meuleman, Miguel
De Maeseneire, Wouter
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Publication Type
Working paper
Editor
Supervisor
Publication Year
2008
Journal
Book
Publication Volume
Publication Issue
12
Publication Begin page
Publication End page
Publication Number of pages
43
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Abstract
Many countries spend sizeable sums of public money on R&D grants to alleviate debt and equity gaps for small firms’ innovation projects. In making such awards, knowledgeable government officials may certify firms to private financiers. This paper investigates whether government subsidies to R&D enhance SMEs’ access to external financing due to this certification effect. Using a unique Belgian dataset of 1107 approved requests and a control group of 501 denied requests for a specific type of R&D grant, we examine the impact on small firms’ external equity, short term and long term debt financing. We find that obtaining a R&D subsidy provides a positive signal about SME quality and results in better access to long-term debt
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Keywords
R&D Subsidies, Government Policy, SMEs, Financial Constraints, Certification Hypothesis, Certification Hypothesis, Behavioural Additionality