scholarly journals The TFP Channel of Credit Supply Shocks

2021 ◽  
pp. 1-44
Author(s):  
Nadav Ben Zeev
Keyword(s):  
State Of The Art ◽  
Real Economy ◽  
Firm Level ◽  
Size Category ◽  
Credit Supply ◽  
Supply Shocks ◽  
Supply Shock ◽  
Level Data ◽  
Capital Misallocation ◽  
Employment Data

Abstract Recent work stresses a potentially important relation between credit supply shocks and aggregate TFP based on factor misallocation. I take three steps to examine this relation. First, using state-of-the-art credit supply shock and aggregate TFP measures, I show that an adverse credit supply shock has a weak and very short-lived effect on aggregate TFP. Second, using firm-level data, I show that firm-level capital stock responses to an adverse credit supply shock produce an insignificant and negligible capital-misallocation-induced TFP response. Third, using employment data by fine firm size category classification, I also find a negligible labor-misallocation-induced TFP response. These findings suggest that the TFP channel of credit supply shocks has a limited role in their transmission to the real economy.

The Anatomy of a Credit Supply Shock: Evidence from an Internal Credit Market

2018 ◽  
Vol 53 (2) ◽  
pp. 547-579 ◽  
Author(s):  
José María Liberti ◽  
Jason Sturgess
Keyword(s):  
Credit Rationing ◽  
Financing Constraints ◽  
Lending Relationships ◽  
Lending Channel ◽  
Credit Supply ◽  
Supply Shock ◽  
Level Data ◽  
Channel Effects ◽  
Post Shock ◽  
Micro Level

We investigate how financial contracting interacts with lending-channel effects by tracing the anatomy of a credit supply shock using micro-level data from a multinational bank. Borrowers with stronger lending relationships, higher nonlending revenues, and those that pledge collateral, especially outside assets and real estate, experience less credit rationing. Consistent with a tightening of financing constraints post shock, borrower composition shifts toward larger and less risky firms, and loans exhibit higher collateralization rates. Our analysis highlights the value of relationships and suggests that relationship banking is a channel through which borrowers can mitigate lending-channel effects.

Credit Supply Shocks, Network Effects, and the Real Economy

2017 ◽  
Author(s):  
Laura Alfaro ◽  
Manuel Garcca-Santana ◽  
Enrique Moral-Benito
Keyword(s):  
Network Effects ◽  
Real Economy ◽  
The Real ◽  
Credit Supply ◽  
Supply Shocks

SME Financing Conditions in Europe: Credit Crunch or Fundamentals?

2013 ◽  
Vol 225 ◽  
pp. R52-R67 ◽  
Author(s):  
Sarah Holton ◽  
Martina Lawless ◽  
Fergal McCann
Keyword(s):  
Euro Area ◽  
Small And Medium Enterprises ◽  
Salient Feature ◽  
Credit Crunch ◽  
Real Economy ◽  
Firm Level ◽  
Macroeconomic Conditions ◽  
Credit Supply ◽  
Cross Country ◽  
Medium Enterprises

Cross-country divergence in credit availability to Small and Medium Enterprises (SMEs) has been a salient feature of the recent Euro Area economic crisis. This paper uses firm level and macroeconomic data to identify heterogeneity in SME credit conditions within the Euro Area since 2009. By taking account of differences in firm quality and in the risk-free interest rate, we use remaining residual differences in credit supply conditions to identify a ‘credit crunch’. We investigate whether macroeconomic conditions such as real economy growth and private sector leverage can explain these residual credit crunches, finding that banks respond to these factors when allocating credit to SMEs. The analysis allows identification of economies where credit conditions appear both unexpectedly restrictive and accommodative.

Implicit Taxes Amid Race to the Bottom in a Global Tax Game

2020 ◽  
Vol 27 (2) ◽  
pp. 42
Author(s):  
Igor Semenenko ◽  
Junwook Yoo ◽  
Parporn Akathaporn
Keyword(s):  
Capital Mobility ◽  
Tax Rates ◽  
Corporate Tax ◽  
Firm Level ◽  
Race To The Bottom ◽  
Tax Subsidy ◽  
Tax Subsidies ◽  
Level Data ◽  
Tax Returns ◽  
Tax Hypothesis

Growing tax competition among national governments in the presence of capital mobility distorts equilibrium in the international corporate tax market. This paper is related to the literature that examines impact of international tax policies on corporate accounting statements. Employing international firm-level data, this study revisits the race-to-the-bottom hypothesis and documents that tax exemptions lowering effective tax rates relative to statutory rates increase pre-tax returns. This finding directly contradicts the implicit tax hypothesis documented by Wilkie (1992), who provided empirical evidence on inverse relationship between pre-tax return and tax subsidy. We also find evidences that relative importance of permanent versus timing component depends on the geography and that decline in corporate tax rates reduces impact of tax subsidies on profitability. Our findings suggest that tax subsidies play a different role than in 1968-1985, which was examined by Wilkie (1992). These results are consistent with the race-to-the-bottom hypothesis and income shifting explanation

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