IMF Working Papers

Credit Supply and Productivity Growth

By Francesco Manaresi, Nicola Pierri

May 17, 2019

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Francesco Manaresi, and Nicola Pierri. Credit Supply and Productivity Growth, (USA: International Monetary Fund, 2019) accessed December 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

We study the impact of bank credit on firm productivity. We exploit a matched firm-bank database covering all the credit relationships of Italian corporations, together with a natural experiment, to measure idiosyncratic supply-side shocks to credit availability and to estimate a production model augmented with financial frictions. We find that a contraction in credit supply causes a reduction of firm TFP growth and also harms IT-adoption, innovation, exporting, and adoption of superior management practices, while a credit expansion has limited impact. Quantitatively, the credit contraction between 2007 and 2009 accounts for about a quarter of observed the decline in TFP.

Subject: Bank credit, Banking, Credit, Economic theory, Financial markets, Interbank markets, Money, Production, Productivity, Supply shocks

Keywords: Bank credit, Borrowing firm, Capital stock, Credit, Credit crunch, Credit supply, Export, Firm balance-sheets, Firm information, Firm TFP, Input acquisition, Interbank market, Interbank markets, IT adoption, Management, Output price, Policy function, Productivity, Productivity dynamics, Productivity effect, Relation characteristic, Supply shock, Supply shocks, WP

Publication Details

  • Pages:

    75

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2019/107

  • Stock No:

    WPIEA2019107

  • ISBN:

    9781498315258

  • ISSN:

    1018-5941