Product Innovation and Credit Market Disruptions

We provide new evidence that disruptions in firms' access to credit during the Global Financial Crisis significantly affected product innovation in the consumer goods sector. We combine highly granular retail scan data with lending data and find that credit-constrained firms introduced fewer new products, those products were less novel, and new products sold less well. Overall, these findings suggest that disruptions to credit markets impair firms' ability to compete for profits through new product offerings. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.