Credit, misallocation and productivity growth: A disaggregated analysis

Meza, Felipe; Pratap, Sangeeta; Urrutia, Carlos

doi:10.1016/j.red.2019.03.004

Cited by 13 publications

(4 citation statements)

References 37 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Compared with state-owned enterprises, in non-state-owned enterprises, effective IC has a significant marginal mitigating effect on financial mismatch. Heterogeneity in credit conditions is important in accounting for efficiency gains [ 70 ]. Therefore, the regulators should create a reasonable financial ecological environment, to reduce ownership discrimination in resources allocation.…”

Section: Discussionmentioning

confidence: 99%

Corporate internal control, financial mismatch mitigation and innovation performance

Xiao

Zhao

2022

PLoS ONE

View full text Add to dashboard Cite

Based on the resource allocation optimization theory, from the perspective of internal control (IC) and financial mismatch jointly affecting technological innovation, this study selects the listed enterprises in China’s capital market from 2012 to 2020 as the sample, and explores the mechanism among IC, financial mismatch and technological innovation. The results show that effective IC significantly promotes corporate innovation, and mitigates financial mismatch. The mitigation of financial mismatch presents a significant mediating effect between effective IC and innovation output. In Discussion, this study finds that the effects are significantly reflected in non-state-owned enterprises, but not in state-owned enterprises. Finally, it is suggested to improve IC effectiveness continuously, to stimulate innovation vitality, optimize financial resources allocation, and foster new momentum for economic development. And it is suggested to facilitate the transmission effect that effective IC mitigates financial mismatch, and enhances innovation output. Also, the innovation activities in state-owned and non-state-owned enterprises should be coordinated to promote the steady and healthy development of the economy.

show abstract

Section: Discussionmentioning

confidence: 99%

Corporate internal control, financial mismatch mitigation and innovation performance

Xiao

Zhao

2022

PLoS ONE

View full text Add to dashboard Cite

show abstract

“…That model, among other things, incorporates some dynamics into the one of Schmidt-Eisenlohr (2013). 16 In the framework of Meza, Pratap, and Urrutia (2019) this friction exacerbates a static misallocation of inputs that leads firms to pay a higher interest rates (with respect to the ones that would prevail in the absence of the friction) leading, by definition, to an inefficient allocation of inputs (see Chari, Kehoe, and McGrattan (2007)). last term of the previous equation.…”

Section: Domestic Firms' Problemmentioning

confidence: 99%

Foreign Currency Working Capital Constraints for Imported Inputs and Compositional Effects in Intermediate Goods

Samano¹

2022

View full text Add to dashboard Cite

Se desarrolla un modelo de mercados incompletos de dos países asimétricos con mercados incompletos en el que las economías intercambian bienes de consumo final e insumos. Las compras de insumos importados de las firmas de una de las economías (la emergente) a las firmas de la otra economía (la avanzada) están sujetas a una restricción de capital de trabajo en moneda extranjera. Se supone que las firmas domésticas financian su capital de trabajo mediante préstamos del hogar doméstico en moneda local. A través de simulaciones numéricas, se muestra que en este entorno los choques de productividad domésticos tienen efectos de recomposición a través del costo del capital de trabajo. En particular, tras un choque positivo de productividad doméstica, los términos de intercambio se aprecian y el costo del capital de trabajo exhibe un aumento repentino seguido de una disminución temporal prolongada. Esto lleva a una recomposición de insumos en la economía emergente en respuesta a los ajustes en el costo del capital de trabajo.

show abstract

“…Whited and Zhao (2019) show that productivity losses can result both from the misallocation of debt and equity and from the misallocation of capital and labour. Meza et al (2019) have shown that interest rates tend to be higher for industries with greater resource misallocation and quantified the impact of credit on static input distortions and total factor productivity (TFP).…”

Section: Motivation and Main Findingsmentioning

confidence: 99%

Bank credit allocation and productivity: stylised facts for Portugal

Azevedo

Mateus

Pina

2021

SEF

View full text Add to dashboard Cite

Purpose The linkages between credit allocation and productivity have particular relevance in Portugal. This study aims to investigate whether credit extended by the Portuguese banking system has been allocated to the most productive firms within each sector. Design/methodology/approach With a data set covering 95% of total outstanding credit to non-financial corporations recorded in the Portuguese credit register, the authors investigate whether outstanding loans by resident banks to 64 economic sectors have been granted to the most productive firms. First, the authors estimate a baseline, reduced-form model of credit reallocation, where the parameter of interest gives the response of total credit granted to each firm to its level of productivity. Second, the authors assess how this response is affected by the share of credit allocated to unproductive firms. Third, the authors redo the analysis with credit granted to each firm by each banking group, instead of by the entire banking system, so that bank indicators can be taken on board. Findings The authors find evidence of misallocation, which reflects the joint effects of credit supply and credit demand decisions taken over the course of time, and the adverse cyclical developments following the accumulation of imbalances in the Portuguese economy for a protracted period. In 2008–2016, the share of outstanding credit granted to firms with very low productivity (measured or inferred) was always substantial, peaking at 44% in 2013, and declining afterwards with the rebound in economic activity and the growing allocation of new loans towards lower risk firms and away from higher risk firms. Furthermore, the authors find that misallocation is associated with slower reallocation. The responsiveness of credit growth to firm relative productivity is much lower in sectors with relatively more misallocated credit and when banks have a high share of such credit in their portfolios. Originality/value Banking system distortions are often mentioned as potential or likely culprits for capital misallocation, but they are not empirically analysed with credit data. The ability to explicitly analyse bank credit and link it to variables pertaining to both firms and banks is a novel feature relative to most previous studies, which largely rely on firm-level or sectoral data alone.

show abstract

Credit, misallocation and productivity growth: A disaggregated analysis

Cited by 13 publications

References 37 publications

Corporate internal control, financial mismatch mitigation and innovation performance

Corporate internal control, financial mismatch mitigation and innovation performance

Foreign Currency Working Capital Constraints for Imported Inputs and Compositional Effects in Intermediate Goods

Bank credit allocation and productivity: stylised facts for Portugal

Contact Info

Product

Resources

About