Access to finance for innovative SMEs since the financial crisis

Neil Lee, Hiba Sameen, Marc Cowling

Research output: Contribution to journalArticlepeer-review


In the wake of the 2008 financial crisis, there has been increased focus on access to finance for small firms. Research from before the crisis suggested that it was harder for innovative firms to access finance. Yet no research has considered the differential effect of the crisis on innovative firms. This paper addresses this gap using a dataset of over 10,000 UK SME employers. We find that innovative firms are more likely to be turned down for finance than other firms, and this worsened significantly in the crisis. However, regressions controlling for a host of firm characteristics show that the worsening in general credit condi- tions has been more pronounced for non-innovative firms with the exception of absolute credit rationing which still remains more severe for innovative firms. The results suggest that there are two issues in the financial system. The first is a structural problem which restricts access to finance for innovative firms. The second is a cyclical problem has been caused by the financial crisis and has impacted relatively more severely on non-innovative firms.
Original languageEnglish
Pages (from-to)370-380
Number of pages11
JournalResearch Policy
Issue number2
Publication statusPublished - 7 Nov 2014

Bibliographical note

© 2014 Elsevier B.V. All rights reserved.


  • Finance
  • SME
  • Entrepreneurship
  • Recession
  • Innovation


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