Theory of public revenue contingent loans for financing innovative entrepreneurial firms

Crawford School of Public Policy | ANU College of Asia & the Pacific

Event details

PhD Seminar (Econ)

Date & time

Friday 13 December 2019


Acton Theatre Level 1, JG Crawford Building #132, Lennox Crossing, ANU


Leana Ugrinovska


Ryan Edwards
6125 5191

In this paper, Leana Ugrinovska discusses a new form of financing innovations, revenue contingent loans, which are not available on the private market for innovative entrepreneurial firms. Governments can and shall fill in that gap, providing RCLs to innovators charging them a cohort risk premium interest rate. Governments have two advantages for RCLs over private markets: transactional efficiencies and the precedent claimant. Further, I have argued and proved, theoretically, that although the innovator’s efforts are affected with RCLs, and not with debt and equity, if I include the asymmetric information, the RCLs will be in first place in the pecking order theory for young and small high-growth innovative firms.

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