Abstract

The aim of the paper is to identify the different role of the financial funds of R&D investments in the Italian firms. The dataset used for this study is the Survey of Italian Firms conducted by the SME Observatory run by the Capitalia Research Division. R&D is defined as a creative activity implemented to improve knoweledge and its use in new applications. Given its intrisic characteristics, R&D is usually characterizedby high information opacity that choerently with the theory of asymmetric information implies more difficulties in finding external financial funds. The greater riskiness on R&D projects could imply banks to some forms of credit rationing. Signalling mechanisms like as self-financing could, however, to correct this market imperfection. In this study we propose a self-selection model in wich the internal (i.e. informed) capital is the way by which the firms signal to the external borrowers the quality of their investment project. The aim of the research is to investigate the determinants of R&D investments financial funds. Moreover, we focus our attention on the estimate of the internal capital compared to the other financial funds. JEL Classification: D82, G21, G32, E51.