Labor Market Effects of Credit Constraints
Author: Anil Kumar
Publisher:
Published: 2019
Total Pages:
ISBN-13:
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Firm-level and Local Labor Market Effects of a Large Credit Shock
Author: Carlos Henrique Corseuil
Publisher:
Published: 2023
Total Pages: 0
ISBN-13:
DOWNLOAD EBOOKA common explanation for the poor performance of entrepreneurs in developing economies is their inability to obtain credit to expand their scale of operation. This paper assesses the aggregate impacts of the Cartão BNDES, a credit line targeted at small and medium enterprises (SMEs) in Brazil, to investigate the role of credit constraints on SMEs performance. We use a major expansion of credit supply within the line to estimate causal effects of credit supply on firm size distribution, entry and exit, and employment. By exploiting the fact that firms can only use the available credit with suppliers that are registered in the credit line's system, we construct a variable that capture a credit supply expansion that varies exogenously across regions. We use an instrumental variable estimator that exploits differential access to the line and the expansion of suppliers to recover these causal effects. Our main result points that a 1% increase in the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social - BNDES) card loans has a positive effect on average local formal employment between 6.7% and 10.3%. This increase in employment is driven by the increase in the average size of firms, specially by the average size of new entrant firms. These are relevant results as they suggest that the type of credit provided by BNDES card foster the dynamics of local labor markets, increasing the entrance of new firms, which are pointed as the group most affected by credit constrains.
Credit Constraints and Labor Supply
Author: Kien Bui Trung Dao
Publisher:
Published: 2016
Total Pages: 45
ISBN-13:
DOWNLOAD EBOOKThis paper examines labor supply adjustment - both at the intensive (hours worked) and extensive (labor force participation) margins - following financial market development. Theoretically, well-functioning credit markets allow individuals to transfer resources and substitute leisure across states. Hence, individuals would behave (w.r.t. labor supply) differently under complete and incomplete credit markets. We exploit the staggered passage of bank branching deregulation in the U.S. to study the impact of relaxing credit constraints on labor supply decisions. The intensity of labor supply, on average, is about 0.3 hours lower after the reform (and about 0.5 hours lower after five years following deregulation). We also find deregulation's impact heterogeneity across income distribution and demographics. The effect of lifting branching prohibitions is most pronounced for the lower-middle income (marginal) group. Further, these findings indicate that blacks were facing higher effective loan prices than whites, suggesting the existence of both statistical and taste-based discriminations. In contrast, we find little to no evidence that deregulation has a significant impact on the extensive margin of participation.
Credit Supply and Productivity Growth
Author: Francesco Manaresi
Publisher: International Monetary Fund
Published: 2019-05-17
Total Pages: 75
ISBN-13: 1498315917
DOWNLOAD EBOOKWe 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.
Effects of Credit Supply on Unemployment and Inequality
Author: Subhayu Bandyopadhyay
Publisher:
Published: 2016
Total Pages:
ISBN-13:
DOWNLOAD EBOOKFinancial Markets and the Macroeconomy
Author: Carl Chiarella
Publisher: Routledge
Published: 2009-06-02
Total Pages: 513
ISBN-13: 1135984506
DOWNLOAD EBOOKThis important new book from a group of Keynesian, but nonetheless technically-oriented economists explores one of the dominant paradigms in financial economics: the ‘intertemporal general equilibrium approach’.
Heterogeneous Effects of Credit Constraints on SMEs' Employment
Author: David Cornille
Publisher:
Published: 2018
Total Pages:
ISBN-13:
DOWNLOAD EBOOKThis paper takes advantage of access to detailed matched bank-firm data to investigate whether and how employment decisions of SMEs have been affected by credit constraints in the wake of the Great Recession. Variability in banks’ financial health following the 2008 crisis is used as an exogenous determinant of firms' access to credit. Findings, relative to the Belgian economy, clearly highlight that credit matters. They show that SMEs borrowing money from pre-crisis financially less healthy banks were significantly more likely to be affected by a credit constraint and, in turn, to adjust their labour input downwards than pre-crisis clients of more healthy banks. These results are robust across types of loan applications that were denied credit, i.e. applications to finance working capital, debt or new investments. Yet, estimates also show that credit constraints have been essentially detrimental for employment among SMEs experiencing a negative demand shock or facing strong product market competition. In terms of human resources management, credit constraints are not only found to foster employment adjustment at the extensive margin but also to increase the use of temporary layoff allowances for economic reasons. This outcome supports the hypothesis that short-time compensation programmes contribute to save jobs during recessions.
Trade Credit and Temporary Employment
Author: Sebastian Nielen
Publisher: Springer
Published: 2016-04-08
Total Pages: 114
ISBN-13: 331929850X
DOWNLOAD EBOOKThis book presents an empirical investigation into the relationship between companies' short-term response to capital and labor market frictions and performance. Two different kinds of performance measures are considered, namely innovation performance and firm performance. The author focuses on two major topics: first, on the relation between innovation performance and the use of trade credit. Second, on the relation between firm performance and the use of temporary employment. The use of in-depth firm-level data and state-of-the-art microeconometric methods provide the scientific rigor to this important investigation to answer the questions currently being confronted by many companies in different economies.
Effects of Credit Supply on Unemployment and Income Inequality
Author: Subhayu Bandyopadhyay
Publisher:
Published: 2019
Total Pages: 18
ISBN-13:
DOWNLOAD EBOOKThe Great Recession, which was preceded by the Financial Crisis, resulted in higher unemployment and income inequality. We propose a simple model where firms producing varieties face labor-market frictions and credit constraints. In the model, tighter credit leads to lower output, a lower number of vacancies, and higher directed-search unemployment. If workers are more productive at higher levels of firm output, then a lower credit supply increases firm capital intensity, raises income inequality by increasing the rental of capital relative to the wage, and has an ambiguous effect on welfare. With an initially high share of labor costs in total production costs, tighter credit lowers welfare. This pattern reverses during an expansionary phase when there is higher credit availability.
Banks, Firms, and Jobs
Author: Fabio Berton
Publisher: International Monetary Fund
Published: 2017-02-14
Total Pages: 57
ISBN-13: 1475579012
DOWNLOAD EBOOKWe analyze the employment effects of financial shocks using a rich data set of job contracts, matched with the universe of firms and their lending banks in one Italian region. To isolate the effect of the financial shock we construct a firm-specific time-varying measure of credit supply. The contraction in credit supply explains one fourth of the reduction in employment. This result is concentrated in more levered and less productive firms. Also, the relatively less educated and less skilled workers with temporary contracts are the most affected. Our results are consistent with the cleansing role of financial shocks.
