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Banks, Firms, and Jobs

Author

Listed:
  • Fabio Berton
  • Sauro Mocetti
  • Mr. Andrea F Presbitero
  • Matteo Richiardi

Abstract

We analyze the employment effects of financial shocks using a rich data set of job contracts, matched with the universe of firms and their lending banks in one Italian region. To isolate the effect of the financial shock we construct a firm-specific time-varying measure of credit supply. The contraction in credit supply explains one fourth of the reduction in employment. This result is concentrated in more levered and less productive firms. Also, the relatively less educated and less skilled workers with temporary contracts are the most affected. Our results are consistent with the cleansing role of financial shocks.

Suggested Citation

  • Fabio Berton & Sauro Mocetti & Mr. Andrea F Presbitero & Matteo Richiardi, 2017. "Banks, Firms, and Jobs," IMF Working Papers 2017/038, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2017/038
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    More about this item

    Keywords

    WP; firm level; service sector; credit crunch; dependent variable; Bank lending channel; Job contracts; Employment; Financing constraints; Cleansing effect; employment decision; quarter FE; financing constraint; employment agency; firm FE; firm cluster; credit supply index; Credit; Bank credit; Loans; Labor force; Asia and Pacific; Global;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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