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

Francesco Manaresi and Nicola Pierri

Journal of Money, Credit and Banking, 2024, vol. 56, issue 4, 677-704

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.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:56:y:2024:i:4:p:677-704

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