Overview
This series traces how lender-driven credit shocks move from bank balance sheets to firms, prices, investment, and delayed physical productivity. Italian and Belgian evidence shows how lender exposure, measurement choices, inventory, and firm buffers shape the result; model counterfactuals extend the mechanism to aggregate welfare but remain conditional.
Learning outcomes
- Lender-driven credit shocks can affect productive capacity beyond their immediate effect on borrowing and output.
- Prices and inventories may cushion short-run liquidity pressure while obscuring a delayed physical-productivity loss.
- Cuts to R&D, training, technology adoption, and other capability investments help explain why damage can persist.
- Firm buffers, lender substitution, and model assumptions shape the size and generalizability of the estimated cost.
Keywords
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PlansFAQ
How can a credit crunch reduce productivity years later?
A credit crunch can reduce later productivity by making firms protect current liquidity at the expense of R&D, training, technology adoption, or other investments with delayed returns.
Why can prices make a credit shock look like a productivity decline?
Because revenue productivity moves with prices as well as physical output, an immediate price cut can lower TFPR even when TFPQ has not yet changed.
What helps firms absorb a lender-driven credit shock?
Alternative lenders, stronger balance sheets, and liquidatable inventory can cushion the adjustment, but each buffer has limits and may not preserve future capability.
How certain are the estimated productivity and welfare costs?
The lender-side firm evidence is stronger than an ordinary debt correlation, but magnitudes remain conditional on the designs, samples, measures, and calibrated model assumptions.