How do banks finance R&D intensive firms? The role of patents in overcoming information asymmetry

Arvid O.I. Hoffmann, Stefanie Kleimeier

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We examine how banks finance R&D intensive firms, focusing on the role of patents in overcoming information asymmetry in bank lending. Consistent with moral hazard in due diligence and monitoring, we find that lead arrangers retain a larger share of syndicated loans when lending to R&D intensive firms. Patents can partly overcome moral hazard problems, as banks retain a smaller share of R&D intensive firms’ loans if these firms have patents as a signal of the quality of their inventions. Our results are robust to alternative explanatory variable definitions and syndicate structure measures, different samples and subperiods, and difference-in-difference estimations.
Original languageEnglish
Article number101485
Number of pages10
JournalFinance Research Letters
Publication statusE-pub ahead of print - 31 Mar 2020

JEL classifications

  • g21 - "Banks; Depository Institutions; Micro Finance Institutions; Mortgages"
  • g32 - "Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill"
  • o32 - Management of Technological Innovation and R&D


  • syndicated loan
  • lead arranger
  • innovation
  • patent
  • information asymmetry
  • moral hazard

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