This paper investigates the impact of the financial crisis on investment decisions in innovative versus non-innovative firms. Firms are defined as being innovative if they have introduced a new product to the market. The empirical test is based on data for the years before and after the recent financial crisis. Probit estimations show that innovative firms are more likely to suffer from the financial crisis and to reduce their investment expenditures in general. To some extent these reductions are due to problems in the acquisition of external capital. Using difference-in-differences methods, it turns out that innovative firms realize the same reduction in growth rates in turnover, but a stronger reduction in investment growth than non-innovative firms.

Giebel, Marek and Kornelius Kraft (2015), The Impact of the Financial Crisis on Investments in Innovative Firms, ZEW Discussion Paper No. 15-069, Mannheim. Download


Giebel, Marek
Kraft, Kornelius


Financial crisis, innovation, investment, credit constraints, difference-in-differences