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The Asymmetric Effect of Credit Supply on Firm‐Level Productivity Growth

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  • FRANCESCO MANARESI
  • NICOLA PIERRI

Abstract

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, to measure idiosyncratic supply‐side shocks to credit availability and estimate a production model augmented with financial frictions. We find the effect of credit supply to be asymmetric: contractions harm TFP growth, halting productivity‐enhancing activities; positive credit supply shocks have limited effects. This points toward a role of financial stability in preserving productivity growth.

Suggested Citation

  • Francesco Manaresi & Nicola Pierri, 2024. "The Asymmetric Effect of Credit Supply on Firm‐Level Productivity Growth," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 56(4), pages 677-704, June.
    • Handle: RePEc:wly:jmoncb:v:56:y:2024:i:4:p:677-704
    DOI: 10.1111/jmcb.13092
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