IDEAS home Printed from https://ideas.repec.org/a/ijc/ijcjou/y2022q3a4.html
   My bibliography  Save this article

Credit Schocks and Allocative Efficiency during a Financial Crisis

Author

Listed:
  • Andrea Linarello

    (Bank of Italy)

  • Andrea Petrella

    (Bank of Italy)

  • Enrico Sette

    (Bank of Italy)

Abstract

This paper studies the effect of credit supply shocks on aggregate labor productivity during a financial crisis. Using data on the universe of Italian manufacturing firms, we decompose aggregate productivity growth in changes in average productivity of incumbents, labor share reallocation among incumbents, entry, and exit. We estimate the impact of industry-specific exogenous credit supply shocks on each component. We find that credit supply tightening entails a drop in average productivity, counterbalanced by the reallocation of labor towards more productive firms, and no significant effect on the contribution of entry and exit to productivity growth. The offsetting response of reallocation is stronger in ex ante more financially constrained industries.

Suggested Citation

  • Andrea Linarello & Andrea Petrella & Enrico Sette, 2022. "Credit Schocks and Allocative Efficiency during a Financial Crisis," International Journal of Central Banking, International Journal of Central Banking, vol. 18(3), pages 125-171, September.
    • Handle: RePEc:ijc:ijcjou:y:2022:q:3:a:4
    as

    Download full text from publisher

    File URL: http://www.ijcb.org/journal/ijcb22q3a4.pdf
    Download Restriction: no
    File URL: http://www.ijcb.org/journal/ijcb22q3a4.htm
    Download Restriction: no
    ---><---

    More about this item

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • G01 - Financial Economics - - General - - - Financial Crises
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ijc:ijcjou:y:2022:q:3:a:4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bank for International Settlements (email available below). General contact details of provider: https://www.ijcb.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.