Credit-supply shocks and firm productivity in Italy

Italy: toward a growth-friendly fiscal reform

“…Moreover, wage growth outpaced productivity growth, contributing to high structural unemployment; see Kangur (2018). Easy access to finance pre-crisis boosted demand, but the double-dip recession earlier this decade and the subsequent tightening of credit conditions set Italy back further; see Doerr et al (2018), and Mohaddes et al (2017). Implementing structural reforms are, thus, of greatest importance.…”

The real effects of banks' corporate credit supply: A literature review

“…This lending cut induced an investment decline for affected European firms. Doerr et al (2018) also study data on syndicated loans but focus only on the case of Italy. They show that Italian banks that were highly exposed to foreign borrowers in distressed countries reduced lending to Italian firms, which in turn reduced investment.…”

“…Studying the European sovereign debt crisis and data on syndicated loans, Acharya et al (2018) show that banks exposed to risky sovereign debt cut lending, which in turn reduced employment among affected European firms. Doerr et al (2018) also use data on syndicated loans but focus exclusively on Italy. Although they show that lenders that are highly exposed to distressed foreign borrowers reduced lending to Italian borrowers, they do not find a significant impact on these firms' employment.…”

“…Additionally, existing evidence also indicates that adverse shocks to credit supply lead to a decline in firm assets (Berg, 2018; De Jonghe et al, 2020; De Marco, 2019; Fraisse et al, 2020; Gropp et al, 2018; Ongena et al, 2015), sales (Acharya et al, 2018; Gropp et al, 2018), profitability (Chava & Purnanandam, 2011; Ongena et al, 2015), value added (Cingano, Manaresi, & Sette, 2016; Dell'Ariccia et al, 2008), stock market valuation (Chava & Purnanandam, 2011; Gan, 2007), as well as an increase in firm default rates (Khwaja & Mian, 2008; Schnabl, 2012). Credit reductions might also reduce firm productivity by distorting firms' optimal capital‐to‐labor ratio (Doerr et al, 2018; Duval et al, 2020; Huber, 2018). During credit contractions intangible investments might be cut as well, contributing further to reduced productivity (De Ridder, 2019; Duval et al, 2020).…”

Inside the Regulatory Sandbox: Effects on Fintech Funding

“…7 Policy makers hence need to promote innovation in the financial sector, but 6 For literature on financing innovation, see Kerr and Nanda (2015); Edler and Fagerberg (2017); Bloom, Van Reenen and Williams (2019). The discussion gained prominence in light of the decline in dynamism and productivity growth since the Great Recession (Doerr, Raissi and Weber, 2018;Doerr, 2019;Duval, Hong and Timmer, 2020). 7 Biais, Bisiere, Bouvard and Casamatta (2019) show that equilibrium investment in computing capacity can be excessive.…”