Intellectual property rights reform and the cost of corporate debt

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review

14 Scopus Citations
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Original languageEnglish
Pages (from-to)195-211
Journal / PublicationJournal of International Money and Finance
Online published8 Dec 2018
Publication statusPublished - Mar 2019


This paper investigates the role of intellectual property rights (IPR) protection on the cost of bank loans for firms in 48 countries. Using substantial reforms of patent rights as a source of identifying variation, the paper provides strong evidence that borrowers from countries that underwent IPR reform experience significant reductions in the cost of bank debt. Importantly, the effects of IPR reform on loan rates are significantly larger in industries that are more IP-intensive. Additional analysis shows that in the wake of reforms borrowers obtain larger size loans, which indicates that improvements in IPR are associated with greater credit availability. IPR reform also increases foreign lenders participation in loan syndicates. Overall, these findings suggest that legal protection afforded to intellectual property has a significant impact on the cost of corporate borrowing and the ability of innovative firms to raise debt capital.

Research Area(s)

  • Intellectual property rights, Bank loans

Bibliographic Note

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