R&D investments and credit lines

Yilmaz Guney, Ahmet Karpuz, Neslihan Ozkan

Research output: Contribution to journalArticle (Academic Journal)peer-review

46 Citations (Scopus)
274 Downloads (Pure)


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.
Original languageEnglish
Pages (from-to)261-283
Number of pages23
JournalJournal of Corporate Finance
Early online date1 Aug 2017
Publication statusPublished - 1 Oct 2017

Structured keywords

  • AF Corporate Finance


  • R&D investment
  • Credit lines
  • Financial crises
  • Debt types


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