Skip to main content

Loan availability and investment: can innovative companies better cope with loan denials?

Buy Article:

$55.00 plus tax (Refund Policy)


This study examines the consequences of loan denials for the investment performance of small- and medium-sized German enterprises. As a consequence of a loan denial, innovative companies experience a smaller drop in the share of actual to planned investment than noninnovative companies. The nonrandomness of loan denials is controlled for with a selection equation employing the intensity of banking competition at the district level as an exclusion restriction. We can explain the better performance of innovative companies by their ability to increase the use of external equity financing, such as venture capital or mezzanine capital, when facing a loan denial.

Keywords: G31; O32; innovation; investment; loan availability; private equity

Document Type: Research Article


Affiliations: 1: Frankfurt School of Finance & Management, Sonnemannstraße 9-11, 60314 Frankfurt/Main, Germany 2: KfW Bankengruppe, Palmengartenstraße 5-9, 60325, Frankfurt am Main, Germany

Publication date: 2013-12-01

More about this publication?
  • Access Key
  • Free ContentFree content
  • Partial Free ContentPartial Free content
  • New ContentNew content
  • Open Access ContentOpen access content
  • Partial Open Access ContentPartial Open access content
  • Subscribed ContentSubscribed content
  • Partial Subscribed ContentPartial Subscribed content
  • Free Trial ContentFree trial content
Cookie Policy
Cookie Policy
Ingenta Connect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more