Strapped for Cash: The Role of Financial Constraints for Innovating Firms< /strong>” joint with Esther Ann Bøler and Karen Helene Ulltveit-Moe< /p>
Abst ract:
This paper analyzes a reform that all owed firms to use patents as stand-alone collateral, to estimate the magnit ude of credit constraints and to quantify the aggregate impact of these con straints on misallocation and productivity. Using detailed firm- and firm-b ank level data for Norway, we find that bank borrowing and the capital stoc k increased for firms affected by the reform relative to the control group, suggesting that innovative firms were credit constrained. We interpret the results through the lens of a model of monopolistic competition with poten tially credit constrained heterogeneous firms. Removing credit constraints increase output per worker through capital deepening and misallocation. Par ameterizing the model using well-identified moments from the reduced form e xercise, we find quantitatively large gains in output per worker in innovat ive sectors of the economy. The gains are primarily driven by capital deepe ning, whereas within-industry misallocation plays a smaller role.
DTSTAMP:20260405T211046Z DTSTART:20220713T130000Z DTEND:20220713T140000Z SEQUENCE:0 TRANSP:OPAQUE END:VEVENT END:VCALENDAR