Financial frictions may represent a severe obstacle for firms' innovative activity. This paper shows the existence and quantifies the effect of binding financial constraints on the innovation propensity of Italian companies. Once provided a rich baseline specification for innovation, I analyze...

Financial frictions may represent a severe obstacle to firms' innovativeness. This paper shows the existence and quantifies the effects of financial barriers to the innovation propensity of Italian companies. Employing direct measures of financial constraints and a credit-score estimated ad hoc,...