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R&D investments and credit lines

Guney, Yilmaz; Karpuz, Ahmet; Ozkan, Neslihan


Yilmaz Guney

Ahmet Karpuz

Neslihan Ozkan


Using data for 939 publicly listed firms from 17 European countries over the period from 2004 to 2013, we investigate the effect of used credit lines on R&D investments, controlling for other determinants of R&D investments, i.e., cash flows, cash holdings, sales growth, equity financing, and Tobin’s Q. Our estimation results, based on the system-GMM method, show that used credit lines have a positive and significant impact on R&D investments. In addition, we find that this impact is more pronounced for small and young firms than for large and mature firms. These results show that firms use credit lines as part of their liquidity management tools for supporting their R&D investments. Finally, we provide evidence that European firms in bank-based countries increased their use of credit lines for financing their R&D investments during the financial crisis of 2007-2009, while the link between R&D investments and used credit lines became weaker during the European sovereign debt crisis of 2010-2013.


Guney, Y., Karpuz, A., & Ozkan, N. (2017). R&D investments and credit lines. Journal of Corporate Finance, 46, 261-283.

Journal Article Type Article
Acceptance Date Jul 28, 2017
Online Publication Date Aug 1, 2017
Publication Date 2017-10
Deposit Date Aug 2, 2017
Publicly Available Date Feb 2, 2019
Journal Journal of corporate finance
Print ISSN 0929-1199
Electronic ISSN 0929-1199
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 46
Pages 261-283
Keywords R&D investment; Credit lines; Financial crises; Debt types
Public URL
Publisher URL
Additional Information This is the accepted manuscript of an article published in Journal of corporate finance, 2017. The version of record is available at the DOI link in this record.


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