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Loan processing costs, information asymmetries and the speed of technology adoption

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  • Capasso, Salvatore
  • Mavrotas, George

Abstract

This paper presents a simple model in which credit-constrained firms might delay the adoption of new and more productive technologies because of the external financing costs involved. Applying for a loan can be a very costly process by itself. Where there is a high degree of credit rationing, these costs might even deter entrepreneurs from applying for a loan altogether. We argue that the efficiency of the banking system, by affecting such costs, can influence the profitability of new technologies and entrepreneur's investment decisions, which, in turn, influence new technology implementation, capital accumulation and growth.

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  • Capasso, Salvatore & Mavrotas, George, 2010. "Loan processing costs, information asymmetries and the speed of technology adoption," Economic Modelling, Elsevier, vol. 27(1), pages 358-367, January.
    • Handle: RePEc:eee:ecmode:v:27:y:2010:i:1:p:358-367
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    3. Dirk Dohse & Rajeev K. Goel & James W. Saunoris, 2023. "Patenting uncertainty and its impact on innovation: evidence from the United States," The Journal of Technology Transfer, Springer, vol. 48(5), pages 1839-1859, October.

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