Showing papers by "Andrea F. Presbitero published in 2017"

Exploring Firm-Level Innovation and Productivity in Developing Countries: The Perspective of Caribbean Small States

Abstract: This monograph explores productivity, innovation, and firm performance, important issues that affect private sector development in the Caribbean region. Using unique and recently available datasets consisting of more than 4,000 surveys at the firm level, and covering 13 Caribbean countries, it examines a set of variables that affect productivity and innovation in the region. The chapters provide a unique perspective on the barriers to innovation, and on how access to finance, competition, foreign direct investment, gender, access to electricity, and public programs affect productivity and innovation at the firm level. The publication culminates with a review of the policy interventions that could have the most impact in increasing firm performance within the region.

Banks, Firms, and Jobs

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.

International Commodity Prices and Domestic Bank Lending in Developing Countries

Abstract: We study the role of the bank-lending channel in propagating fluctuations in commodity prices to credit aggregates and economic activity in developing countries. We use data on more than 1,600 banks from 78 developing countries to analyze the transmission of changes in international commodity prices to domestic bank lending. Identification relies on a bankspecific time-varying measure of bank sensitivity to changes in commodity prices, based on daily data on bank stock prices. We find that a fall in commodity prices reduces bank lending, although this effect is confined to low-income countries and driven by commodity price busts. Banks with relatively lower deposits and poor asset quality transmit commodity price changes to lending more aggressively, supporting the hypothesis that the overall credit response to commodity prices works also through the credit supply channel. Our results also show that there is no significant difference in the behavior of foreign and domestic banks in the transmission process, reflecting the regional footprint of foreign banks in developing countries.

Sanctions and Public Opinion: The Case of the Russia-Ukraine Gas Disputes

Abstract: Economic sanctions usually fail, sometimes even provoking the opposite of the intended outcome. Why are sanctions so often ineffective? One prominent view is that sanctions generate popular support for the targeted government; an outcome referred to as the rally-around-the-flag effect. But despite substantial anecdotal evidence, the lack of suitable data gathered during sanction events has prevented direct study of the rally-around-the-flag effect. We address this gap using a panel household survey in Ukraine that collected data on political and economic preferences before and after a major trade dispute with the Russian Federation. The dispute led to a cut in gas exports to Ukraine and dramatically increasing gas prices for consumers. Our findings show that people more directly affected by the sharp increase in gas prices were substantially more likely to change their political views in a "pro-Western" direction and in support of a more open democratic system. We identify a similar effect regarding economic policies, leading to more than a doubling in the likelihood of supporting liberal market views. Suggestive but less conclusive evidence also suggests that Ukrainians who were more directly affected by the dispute were more likely to support joining the European Union.

Banks, Firms, and Jobs

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.

Banks, Firms, and Jobs

Abstract: Unemployment is one of the most visible effects of financial crises. We contribute to the empirical literature on the employment effects of a decline in bank credit, investigating individual heterogeneity across firms, workers and jobs in response to a financial shock. We use a rich data set of over 1.5 million individual job contracts in an Italian region, which is matched with the universe of firms and their lending banks. To isolate the effect of the financial shock we construct a firm-specific time-varying measure of credit supply. Our findings indicate that a 10 percent supply-driven credit contraction reduces employment by 2.5 percent. The effect is mostly concentrated among relatively less-educated and less-skilled workers with temporary contracts, and is consistent with the presence of a “dual” labor market and a skill-upgrade strategy adopted by firms in response to the financial shock.

Financial Development and Monetary Policy: Loan Applications, Rates, and Real Effects

Abstract: The finance-growth literature argues that institutional constraints in developing countries impede financial intermediation and monetary policy transmission. Recent studies using aggregate data document a weak bank lending channel. For identification, we instead exploit Uganda's super- visory credit register, with loan applications and rates, and unanticipated variation in monetary policy. A monetary tightening strongly reduces credit supply - increasing loan application rejections and tightening volume and rates - especially for banks with more leverage and sovereign debt exposure (even within the same borrower-period). There are spillovers on inflation and eco- nomic activity, especially in more financially-developed areas, including on commercial building, trade, and social unrest.