The effect of credit shocks in the context of labor market frictions

Liao, Shushu

doi:10.1016/j.jbankfin.2021.106091

Cited by 4 publications

(1 citation statement)

References 63 publications

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“…However, labor market friction disrupts this labor force redistribution, leading to prolonged high unemployment rates. Liao (2021) demonstrates that negative credit impacts coupled with labor market friction restrict labor mobility, leading to an overall decline in employment rates and a reduction in marginal capital productivity [ 24 ]. Schmitt-Grohé et al (2022) contend that capital inflow "sudden stops" dampen a country’s demand, directly lowering non-tradable goods output and labor demand, culminating in elevated unemployment rates in this sector [ 25 ].…”

Section: Literature Reviewmentioning

confidence: 99%

Financial crisis, labor market frictions, and economic volatility

Lei,

Li,

Mei

2023

PLoS ONE

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This article analyzes cross-country data encompassing 130 countries and regions from 2000 to 2019 to investigate the correlation between financial crises, labor market frictions, and economic volatility. The empirical findings demonstrate that financial crises have a milder impact on real gross domestic product (GDP) in developing countries with flexible labor markets. This trend also applies to non–eurozone developed countries, where labor market flexibility aids crisis mitigation. However, this pattern doesn’t hold for eurozone countries. Further examination of developing nations reveals that those with heightened labor market flexibility tend to experience reduced adverse effects on non-tradable sectors, thereby mitigating the impact on real GDP.

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Section: Literature Reviewmentioning

confidence: 99%

Financial crisis, labor market frictions, and economic volatility

Lei,

Li,

Mei

2023

PLoS ONE

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B: Financial Instruments and Markets

2021

World Banking Abstracts

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Evaluating the Relationship Between Banking Credit and Total Deposits in the Context of National Highway Development in India

Bhattacharya,

Upadhyay,

Bag

2024

Vision: The Journal of Business Perspective

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National Highways (NHs) are key facilitators of sustainable growth and development. NHs have a multiplier effect on overall growth, industrialization and urbanization. A key challenge is that the investment that manifests, in terms of savings, deposits and bank credit, is highly endogenous. In such a scenario, a pertinent question arises: Do NHs have an impact or a mirror effect on bank credit? We skirt the problem by investigating the impact of the NH on bank credit. We study this research question by using NHs, examining the growth of banks in the treatment districts (districts within 10 km of an NH) and the control districts (districts beyond 50 km of an NH). We adopted panel regression with fixed effects and long difference estimation to analyse the research problem. The results from the districts that are within 10 km of an NH have a positive association with bank credit and aggregate deposits. This fosters the belief that bank credit and aggregate deposits respond to the development of infrastructural projects such as NHs. In conclusion, the study investigates an empirical association between the construction of NHs during the period between 2014 and 2022 and the local financial sector. Our results are helpful for policymakers and the National Highway Authority of India in evaluating the impact of infrastructural investment on access to banks in the context of an emerging economy. Our results indicate that an NH has a positive impact on the financial sector, but there is still a long road ahead.

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The effect of credit shocks in the context of labor market frictions

Cited by 4 publications

References 63 publications

Financial crisis, labor market frictions, and economic volatility

Financial crisis, labor market frictions, and economic volatility

B: Financial Instruments and Markets

Evaluating the Relationship Between Banking Credit and Total Deposits in the Context of National Highway Development in India

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