Empirical evidence shows that innovative firms are often more constrained in obtaining

external funds than less innovative firms. Explanations are based on the uncertain

outcome and high costs of R&D effort. When providing credit, the lender assesses the

creditworthiness of the borrower. She relies on financial data and market analysis. The

financial data analysis reveals costs and the market outlook is linked to the uncertainty

of future profitability. In this paper we examine whether the credit assessment behaviour

of banks hurts firms of a more innovative sector more and how this affects long term

innovative success and economic development. We use an evolutionary approach à la

Nelson and Winter but with two sectors. A bank provides credit and supplies it to single

firms based on a rating. We illuminate the impact of rating process characteristics on the

long term outcome. When the bank does not distinguish for sector-specific features, such

as risk and market outlook, the high-tech sector benefits over-proportionally because the

surviving firms have a high profitability and further innovations are more likely. The way

that the bank forms expectations about the market outlook influences the allocation

of credit between sectors. The innovative sector is supplied more credit if the market

outlook is assessed in a rather conservative fashion. The impact on aggregates however,

is limited because the bank uses other pieces of information as well.