Services trade and credit frictions: Evidence with matched bank–firm data

Abstract

This paper investigates the relationship between bank credit and exports of services by Italian firms. In order to identify the role of credit supply in services exports we use matched data on bank-firm relationships and the shocks affecting banks' funding during the sovereign debt crisis. The study suggests that credit supply shocks had a significant impact on services exports: a bank credit reduction of 1% led to a fall in exports of about 0.4%. These results hold even after controlling for alternative sources of firms' external finance, unobserved credit demand heterogeneity and a number of robustness checks.

An Economic Assessment of the Evolution of the Corporate Tax System in Italy

“…For comparability, in the base scenario the economic assumptions for the computation of the cost of capital and the effective tax rates are largely based on ZEW-PWC (2020). The real interest rate is set at 5% and the inflation rate at 2%.…”

“…Interestingly, the lowering effect of the statutory tax rate cut in 2017 (from 27.5% to 24%) on the cost of capital was more than offset by the combined effect of the decrease of the notional ACE rate from 4.75% to 1.6% and the reduction of the super-depreciation from 40% to 30% of the cost of the asset. Notes: The EMTR-ZEW for the period 2010-2019 is drawn from ZEW-PWC (2020). The new EMTR for 2019 is computed assuming the temporary abrogation of ACE and a Mini-Ires regime with a rate cut of 1.5%.…”

“…Figure 1. Effective marginal tax rate in the main European countries and the UK, 2010-2019 Source: ZEW-PWC (2020). Notes: the effective marginal tax rate is an average across sources of finance (retained earnings: 55%, new equity: 10% and debt: 35%) and five equally-weighted assets (financial asset, inventory, industrial buildings, machinery and intangibles).…”

“…From a methodological point of view, the analysis relies on a multi-period model set up in continuous time. Compared with the DG approach used in ZEW-PWC (2020), ISTAT (2018) and at the OECD level (Hannapi, 2018) that considers a one-period change of the capital stock, in discrete timea multi-period framework more naturally conforms to some of the analyzed provisions, such as the new tax credit introduced in 2020 for investments in machinery where the tax effects extend over a certain number of periods 16 . The standard multi-period model is then adapted to take into account the characteristics of the Italian tax system.…”

“…See Steinmüller et al (2019) for a more recent empirical application that exploits both firm-and industryspecific data in a panel of countries. 13 See ZEW-PWC (2020) and Hannapi (2018). 14 See ISTAT (2018) and Caiumi et al (2015).…”