Off to a Bad Start? The Role of Leverage for Start-Up Productivity during the Financial Crisis

Vincent Sterk, Jasper de Winter (), Neeltje van Horen and Ralph De Haas
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Vincent Sterk: University College London
Neeltje van Horen: Bank of England
Ralph De Haas: European Bank for Reconstruction and Dev

No 201, 2018 Meeting Papers from Society for Economic Dynamics

Abstract: We study the channels via which start-ups have contributed to aggregate productivity growth, before and during the financial crisis of 2008. We propose a novel productivity decomposition method, building on Melitz and Polanec (2015), which we apply to administrative micro data on the population of Dutch start-ups. Exploiting detailed balance sheet information, we document striking differences between the contributions of high- and low-leverage start-ups. Moreover, the arrival of the crisis triggered came with a collapse in productivity growth. We interpret these findings through the lens of a firm dynamics model with financial constraints and real adjustment frictions.

Date: 2018
New Economics Papers: this item is included in nep-ent and nep-eur
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