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Credit rationing, innovation, and productivity: Evidence from small- and medium-sized enterprises in China

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  • Yu, Jian
  • Fu, Jiasha

Abstract

Studies have shown that credit rationing hampers firm productivity. However, few studies have focused on the relationships among credit rationing, innovation, and firm productivity of small- and medium-sized enterprises in developing countries. This study addresses this research gap using a unique monthly dataset of 13,656 Chinese firms from January 2015 to December 2017 to directly measure credit rationing, and investigates how firm productivity reacts to credit rationing. The study finds that weak and strong credit rationing hamper firm productivity through the innovation channel. The study also finds that the negative effect of credit rationing is more obvious for firms with no real estate investment or less investment willingness.

Suggested Citation

  • Yu, Jian & Fu, Jiasha, 2021. "Credit rationing, innovation, and productivity: Evidence from small- and medium-sized enterprises in China," Economic Modelling, Elsevier, vol. 97(C), pages 220-230.
    • Handle: RePEc:eee:ecmode:v:97:y:2021:i:c:p:220-230
    DOI: 10.1016/j.econmod.2021.02.002
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    5. Miglo, Anton, 2022. "Theories of financing for entrepreneurial firms: a review," MPRA Paper 115835, University Library of Munich, Germany.
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    More about this item

    Keywords

    Credit rationing; Productivity; Innovation; Small- and medium-sized firms;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • P34 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

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