The Limits of Lending: Banks and Technology Adoption Across Russia

73 Pages Posted: 4 Aug 2015

See all articles by Cagatay Bircan

Cagatay Bircan

European Bank for Reconstruction and Development (EBRD)

Ralph De Haas

European Bank for Reconstruction and Development; Centre for Economic Policy Research (CEPR); KU Leuven

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Date Written: July 31, 2015

Abstract

We exploit historical and contemporaneous variation in local credit markets across Russia to identify the impact of credit constraints on firm-level innovation. We find that access to bank credit helps firms to adopt existing products and production processes that are new to them. They introduce these technologies either with the help of suppliers and clients or by acquiring external know-how. We find no evidence that bank credit also stimulates firm innovation through in-house R&D. This suggests that banks can facilitate the diffusion of technologies within developing countries but that their role in pushing the technological frontier is limited.

Keywords: credit constraints, firm innovation, technological change

JEL Classification: D220, F630, G210, O120, O310

Suggested Citation

Bircan, Cagatay and De Haas, Ralph, The Limits of Lending: Banks and Technology Adoption Across Russia (July 31, 2015). CESifo Working Paper Series No. 5461, Available at SSRN: https://ssrn.com/abstract=2639610 or http://dx.doi.org/10.2139/ssrn.2639610

Cagatay Bircan

European Bank for Reconstruction and Development (EBRD) ( email )

One Exchange Square
London, EC2A 2JN
United Kingdom
+442073388508 (Phone)
+442073386111 (Fax)

HOME PAGE: http://cagataybircan.com

Ralph De Haas (Contact Author)

European Bank for Reconstruction and Development ( email )

One Exchange Square
London, EC2A 2JN
United Kingdom

HOME PAGE: www.ebrd.com

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

KU Leuven ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

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