Economic theory suggests that financing constraints may occur due to capital market imperfections. These particularly affect investments in innovation projects as such projects are typically characterized by a high degree of uncertainty, complexity and specificity. Financing innovation...

This study tests for financial constraints on Ramp;D investment and how they differ from capital investment. To identify constraints in the access to external capital, we employ a credit rating index. Our models show that internal constraints, measured by mark-ups, are more decisive for Ramp;D...