The Impact of Bank Credit on Labor Reallocation and Aggregate Industry Productivity

By John (Jianqiu) Bai, Daniela Carvalho, Gordon M. Phillips. Journal of Finance, 2018

147 citations recorded by the source corpus.

We provide evidence that the deregulation of U.S. state banking markets leads to a significant increase in the relative employment and capital growth of local firms with higher productivity, and that this effect is concentrated among young firms. Using financial data for a broad range of firms, our analysis suggests that this effect is driven by a shift in the composition of local bank credit supply toward more productive firms. We estimate that this effect translates into economically important gains in aggregate industry productivity and that changes in the allocation of labor play a central role in driving these gains.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/5e9a27ba984dffc3073cca2838fe4f57d3b0363e

Citations in the corpus

• How Does Credit Supply Expansion Affect the Real Economy? The Productive Capacity and Household Demand Channels (2020, unknown): “However, recent evidence suggests that sudden three to four year increases in private (33)Examples of studies that support the role of the productive capacity channel following banking deregulation and other credit supply expansions include Jayaratne and Strahan (1996), Bai et al. (2016), Bertrand e”