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We analyze contract-level data on approved and rejected microloans to assess the impact of a new credit registry in Bosnia and Herzegovina, a country with a competitive microcredit market. Our findings are threefold. First, information sharing reduces defaults, especially among new borrowers, and increases the return on lending. Second, lending tightens at the extensive margin as loan officers, using the new registry, reject more applications. Third, lending also tightens at the intensive margin: microloans become smaller, shorter, and more expensive. This affects both new borrowers and lending relationships established before the registry. In contrast, repeat borrowers whose lending relationship started after the registry introduction begin to benefit from larger loans at lower interest rates.

We examine whether firms’ tax uncertainty affect their trade credit and inventory investment policies. Using a measure of tax uncertainty based on an accounting reserve for contingent tax liability...

Using confidential tax return data, we provide a unique research setting in which the Belgian notional interest deduction (NID) is replaced by the Allowance for Growth and Investment (AGI) as it is proposed by the European Commission. Our results show that the AGI would be a more viable option from a budgetary view. From a company view, however, introducing an AGI system would increase the probability of a higher effective tax rate (ETR). Especially large companies would be harmed as they would face a 7.6 percentage point higher probability of an ETR increase compared with SMEs. Furthermore, we find that there is a positive relationship between the equity ratio and the increased ETR, which is stronger for large firms compared to SMEs. This is in line with previous studies stating that large firms adjusted more aggressively to the NID by increasing their equity ratio more heavily than SMEs. However, large firms still face an ETR that is on average 10.4 percentage points lower compared with SMEs, indicating that the AGI is insufficient to undo the unequal level playing field between large and small companies. (JEL codes: H21, G32, H25, K34).

This paper provides new empirical evidence on the wage and leverage relationship, which supports the notion of strategic leverage. Unlike in previous papers, I use worker-firm matched data of Korea...

Research background: Wage inequalities are still part of an interesting policy-oriented research area. Given the developments in international trade models (heterogeneity of firms) and increasing availability of micro-level data, more and more attention is paid to wage differences observed within and be-tween firms. Purpose of the article: The aim of the paper is to address the research gap concerning limited cross-country evidence on a nexus of wage inequality?global value chains (GVCs), analysed from the perspective of wage inequality components within and between firms. Methods: This paper uses a large employee?employer database derived from the European Structure of Earnings Survey (SES), combined with sector-level indicators of GVC involvement based on the World Input-Output Database (WIOD). As a result, a rich database covering more than 7.5 million observations is created. The regression-based decomposition modelling technique developed by Fiorio and Jenkins (2010) is used to identify the contributions of different factors to wage inequalities, focusing on the components within and between firms. Findings & value added: The analysis presented in this paper aimed to show the contribution of GVC involvement, among various other factors, to the observed inequality of wages. Due to the use of a rich database that merges employer and employee data, the effects materialised with respect to different types of wages could be analysed separately, in particular components between and within firms. The general conclusion from the regression-based decomposition in log wages is that GVCs contribute marginally to the observed wage inequality in the European sample analysed in this paper. Some differences confronting the components within and between firms (the latter dominates) are observed; there is also certain intra sample heterogeneity in the estimated results (e.g. due to sector type or country group), but the general result is robust.

Financial constraints have been a significant obstacle to firms operating in developing countries. Prior studies show that foreign direct investment (FDI) helps to ease credit constraints for domestic firms. However, they only account for horizontal FDI spillovers. This paper therefore investigates both horizontal and vertical FDI spillovers using firm-level data from Cambodia, Lao PDR, and Myanmar (CLM). The key findings of this paper are threefold. First, FDI inflows lessen the financial constraints faced by local firms through partnership or joint venture. Second, an increasing share of FDI in horizontally and vertically related industries raises higher credit constraints for domestic firms. Third, the crowding-out effect of FDI is not uniform across domestic firms of different sizes. Therefore, policymakers should be aware of these possible negative spillovers and formulate policy to maintain FDI inflows while also ensuring the growth and survival of domestic firms.

The study explains the export pricing behaviors of Egyptian firms using detailed customs data and high-dimensional fixed effects. Firstly, it finds that more productive firms (as proxied by firms’ ...

PurposeThe authors provide firm-level evidence that external financing affects international trade in a way different from internal financing.Design/methodology/approachThe authors separate new entrants from incumbent exporters and investigate the roles of external and internal financing in export market participation and export quantity.FindingsThe authors find that external financing is of particular importance, as well as internal financing, in helping a firm become a new exporter. By contrast, external financing, unlike internal financing, is not significantly important for an incumbent exporter to stay in the international market. Regarding export quantity, a firm's internal financing is positively associated with more export quantity, whereas external financing is not.Originality/valueThe authors’ findings are consistent with the existence of significant fixed cost for entering the export market and external financing is particularly needed to cover such cost. Meanwhile, the financial need for maintaining the export status is much less and can be satisfied via internal financing.

This letter provides firm-level evidence that policy makers tailor trade policy to suit selected firms. It argues that firms with higher levels of specific assets find it more costly to reorganize production, and are hurt more by international competition. In response, policy makers grant more trade protection to firms with fixed assets. Since protectionism is costly, firms compete for it, which creates diffusion dynamics in which the protection granted to one firm affects the protection granted to others. This claim is tested utilizing the special role antidumping duties (ADDs) play in international trade, and combining petitions for ADDs with financial data on the firms filing them in a unique dataset. Using spatial autoregressive models, the authors find that firms with specific assets are granted more protection. However, diffusion dynamics differ within and between groups of firms producing the same good. This suggests that firms can partly shape their own level of trade protection.

Purpose Based on 9,281 firm-level survey data on micro, small and medium enterprises (MSMEs) in India, this study aims to investigate how access to different finance sources and collateral requirement facilitates the firm’s innovation activity across industries. Design/methodology/approach This paper used ordered logit regression models using Stata software for explanatory variables to measure the impact of explanatory variables on firm innovation performance. Firms’ innovation performance is measured through the aggregate innovation index obtained by adding up the no. of “new-to-firm” activities. Findings The empirical results reveal that external sources of funding impact innovation activity than other financing sources. Also, the requirement of collateral for financing impacts innovation performance significantly. This paper finds that firms funded by state-owned banks or government agency are more actively engaged in innovation activities. The firm’s size, ownership structure and location of the firm also show the varying innovation performance. This paper found variation in innovation performance across industries as well. Practical implications First, the present study underlines the significance of funding sources. Second, minimizing the need for collateral to obtain external finance boosts small firms’ innovation activity and will also trigger overall economic growth. Finally, while making policies for ownership transformation of state-owned institutions, policymakers should discuss these policies’ impact on innovative firms. Originality/value What facilitates innovation performance in an emerging market is missing in the literature for MSMEs, largely due to lack of data. It is reasonable not to generalize innovation knowledge in large firms to small firms because of the constraints, particularly MSMEs face.

This paper explores the relationship between financial constraints and firm participation in global value chains (GVC). We use a rich firm-level data belonging to the Indian manufacturing sector fo...

We examine how political conflicts affect trade, using both the Goldstein score that scales all political conflicts daily worldwide and the firm-country-product level data of Chinese imports. We find that political conflicts reduce Chinese imports in general. Specifically, (i) the imports of State-owned enterprises (SOEs) are most reduced, and the effects mostly fall on imports of intermediate goods while not so much on capital goods; (ii) foreign-invested enterprises (FIEs) are less negatively affected, because most of their trade is processing, which is less negatively affected by political conflicts than ordinary trade. These results are obtained via mechanisms in the mode of trade (processing vs. ordinary), variations in broad economic categories (BEC) and import boycotts and export controls.

Most of the foreign direct investment (FDI) studies on location determinants are based on macroeconomic characteristics. However, it is important to understand to what extent microeconomic obstacles hinder FDI. This study explores obstacles to FDI in Malaysia, based on firm‐level data. To overcome the problem of uncertainty in variable selection, Bayesian model averaging for logistic regression is employed. Using the Enterprise Surveys 2015 dataset for analysis, the Bayesian logistic regression approach provides robust findings on the importance of access to land, crime, and disorder as obstacles to FDI.

This paper studies productivity convergence to the regional and national frontiers among manufacturing firms in India, using panel data over the period 1999 to 2010. We find evidence that lagging firms converge to their national and regional frontiers, with faster speed of convergence to the national frontier than to their regional frontier. We extend our analysis to explore how firms��� participation in foreign markets (through exporting and investing abroad) affects the process of convergence. Our results suggest a ranking of firms��� speed of convergence based on their level of international engagement through exports, with non-exporters converging faster to their technological frontiers, followed by non-continuous exporters, and finally by continuous exporters. These results suggest that more established exporters are closer to the technological frontier and therefore have less scope to catch up than their less persistent counterparts and non-exporting firms. However, we did not find significant differences in the speed of convergence amongst exporting firms that have moved to the next stage of globalisation by investing abroad.

This paper employs euro area firm-level data covering the years 2002–18 to examine the impact of cross-border debt flows on the domestic allocation of credit across firms conditional on their profitability. As only debt flows driven by global push factors are exogenous with respect to domestic credit allocation, I overcome the endogeneity of debt flows by instrumenting them with a measure of global uncertainty (VIX). My results show that debt flows raise the credit growth rates of low performing firms significantly more than those of high performing firms. This result is driven by domestic banking sectors with lower capitalization.

This paper examines the effect of export value-added tax (VAT) rebate policy on the margins of exports in terms of export value, quantity and price. Treating the VAT rebate adjustment implemented in July 2007 as a quasi-natural experiment, we find that a reduction in the export VAT rebate rate has significantly reduced export value and quantity with an incomplete pass-through to export price. The estimated responses to the rebate are generally higher than those to exchange rate fluctuations and comparable to those to tariff changes.

The objective of the paper is to estimate the asymmetric response of firms for prices to supply and demand shocks. Firms give an asymmetric response to supply and demand shocks while setting at a price, and the prices are upward flexible and downward rigid to changes in the determinants. Asymmetric response to the cost of raw material is highest. Moreover, the seasonal factors have the lowest degree of asymmetric response. Firms give an asymmetric response to different shocks, with respect to a price increase and decrease, and across variables of demand-side and supply side. The central bank has to focus more on stabilization in response to supply shocks than to demand shocks because supply shocks are found more important than demand shocks to change the prices of firms. Measures should be taken to prevent the possible effects of adverse supply shocks.

This paper investigates the impact of technological innovation associated with the Fourth Industrial Revolution (4IR) on firm wage levels using longitudinal firm-patent data for 27 OECD countries. The study finds that 4IR technological innovations raise firm wage levels, and this wage-boosting effect is stronger than that generated by non-4IR innovations. We also find evidence that the wage-boosting effect only appears amongst firms in high technology sectors and firms innovating in core technologies.JEL classification: O31, O33.

This paper provides new insights into the study of technology spillover effects through the interaction between industrial and spatial linkages. We develop a theoretical model that provides a useful modeling framework for spillover research, and then empirically test the model inferences using Chinese firm-level data. Input-output tables and spatial decay measurements are combined to construct the key spillover variables. Using seemingly unrelated regressions, the paper finds that vertical spillover effects are more significant than horizontal spillover effects, both within- and between-regions; regional characteristics have greater impacts on vertical spillovers than on horizontal spillovers; and regional spillover effects vary across different regions. Regional policies and regional endowments, including human capital, transportation infrastructure, and enterprise ownership, are crucial in explaining these heterogeneities in regional technology spillover. Our empirical results provide many policy implications including strengthening the connection between upstream and downstream industries and devoting more R&D to upstream industries.

This paper investigates the impact of macroprudential policies and uncertainty of economic environment on corporate leverage dynamics over the last decade. This is the first study to investigate the impact of macroprudential policies and uncertainty on leverage dynamics of Turkish non-financial firms using firm-level data. We argue in this paper that persistence of uncertainty should be a more appropriate factor affecting credit dynamics rather than uncertainty. In that sense, we construct a measure of uncertainty by using principal component analysis and a measure of persistence of uncertainty for Turkey. Results from the dynamic panel models with a large set of control variables, provide significant evidence in support of the argument that leverage decisions are affected from the persistence of uncertainty rather than the uncertainty itself. Moreover, both the share of the financial debt in total liabilities and the leverage of Turkish non-financial firms decrease significantly when uncertainty increases persistently and when macroprudential policy tools are tightened. Most strikingly, this is the case only for Small and Medium-Sized Enterprises but not for large firms.

This study enhances the existing literature on the Adaptive Market Hypothesis (AMH) and calendar anomalies. The study is a first attempt to link the Islamic and conventional Holidays’ effect with the Adaptive Market Hypothesis that allows the performance of well-known Holiday Effect to fluctuate over time. To fulfil the purpose of the study, the daily returns of 107 individual firms listed in Pakistan Stock Exchange over the period of 20 years (from January 1996 to December 2015) are observed. To explore the varying degree of return predictability of Holiday Effect, the research utilizes four different subsamples comprising an equal length of observations of five years each. It is found that the behavior of the Holiday Effect evolves over time as the performance of this effect varies occasionally and is consistent with AMH. Finally, the paper proposes that the Adaptive Market Hypothesis is a well elucidation of the behavior of the Holiday Effect than traditional Efficient Market Hypothesis (EMH).

I combine firm‐level export data from eight low‐income and middle‐income countries to test the relation between export price and export revenue. Across‐firm estimations show a strong positive association between export price and export revenue. Within‐firm estimations show that firms generate larger export revenue from their high‐price products. The positive correlation between export price and export revenue is strong for manufactures, weak for primary commodities, and nonexistent for extractables. Results are robust to using an alternative quality measure and controlling for exporters’ market power.

This article examines the effects of domestic currency depreciation on agricultural exports from Pakistan including the responses of price and quantity margins. It uses highly disaggregated firm‐level data that contains the exchange rates of the actual currencies of invoicing at the transaction level. The study finds that the currency depreciation positively affects both intensive and extensive margins. The intensive margin increase in agricultural exports operates mainly through prices, whereas the response of quantities is relatively smaller. Moreover, depreciation improves the extensive margins of firms and products and expands the client base in existing markets. These responses vary widely across firms' exporting experience, trade orientation, sectoral and spatial distribution, exchange rate regimes, and invoicing currencies.

This paper examines the relationship between export diversification, export margins and economic growth at the industry level using Thailand as a case study during 2002–16. Our results show that the effects of export diversification and margins on economic growth vary across industries. Export diversification helps boost growth only in some sectors, including electronics, automotive and chemicals, plastic and rubber, while in the processed food, and textiles and apparel industries, specialisation matters more in promoting growth. In almost all industries, a non‐linear relationship between diversification and economic growth is not revealed, except in textiles and apparel. The diversification is crucial in enhancing the impact of exports on growth only in the processed food and textiles and apparel industries. Expansion of intensive margins plays an important role in boosting growth in key industries within Thailand. The role of extensive margins, both in terms of new products and new market destinations, in promoting economic growth is limited. For extensive margins (new products), it is found to be significant in boosting economic growth only in processed food and textiles and apparel, while in the case of extensive margins (new market destinations), its significance in boosting growth is revealed only in the electronics sector.

This article looks at the mortality of Canadian pensioners subdivided by pension level using data from the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP). Differing pension levels (11 grou...

This study focuses on the prefecture-level cities in various provinces and autonomous regions in China, collects economic data from 2009 to 2014, and analyzes the cost efficiency in each region. To...

This study has empirically tested the relation between leverage and market concentration using a balanced panel data on 1469 firms over 26 manufacturing industries during 2001–2016 in the context of India. Our regression results indicate that competition has an overall negative effect on leverage. The negative effect of competition on leverage is intensified with larger firm size and larger growth opportunities. Finally, we examine whether the relationship between leverage and competition is non-monotonic. Our results show no important departure from linearity while using HHI but support the cubic relationship while using Tobin’s q. Different tests of robustness support our results.

We examine how economic policy uncertainty (EPU) affects firms’ cash holdings and how such changes in cash holdings affect firm value and capital investment in China. Our findings suggest t...

This paper provides cross-country macro-economic level evidence on the impact of tourism on house prices based on a panel of 20 OECD countries during the period 1995 to 2014. In its analysis, the study also accounts for institutional quality, banking credit, per capita income and income inequality. We employ Augmented Mean Group (AMG) estimator for the empirical investigation. The findings derived from AMG are robust and reliable as it accounts for cross-sectional dependence and allows for heterogeneous slope coefficients across panel members. The results show that tourism and its interaction with income inequality have a significant positive impact on house prices in the OECD economies. The findings also suggest that the growth in banking credit and per capita income further increases house prices, while institutional quality has the opposite impact. These findings offer new policy insights and practical knowledge.

This paper adds to the existing firm-level evidence on international trade in non- tourism services, using a new Portuguese database merged with balance-sheet data. In accordance with the literature, we find that a small number of firms that both export and import services (two-way traders) with diversified service and geographi- cal portfolios account for a substantial share of trade flows. Compared with one-way traders, two-way traders are larger, older, more productive, more profitable and have a higher share of foreign equity. Considering all margins of firm-level trade and con- trolling for firms’ characteristics, the intensive margins of exports and imports of services are positively related to both productivity and profitability. Regarding the extensive margins, the number of services imported is also positively associated with firms’ performance. info:eu-repo/semantics/publishedVersion

This paper studies the effect of exchange rates’ volatility on India’s imports on a balanced panel of 73 commodities spanned from April 2013 to October 2016. Rather than using cross-country...

Using a comprehensive data set of 22 industries in 86 countries over the period 1980–2012, we empirically identify the effect of inequality on industry-level value added growth. We show that an unequal income distribution increases the growth rates of physical-capital-intensive industries and reduces the growth rates of human-capital-intensive industries by lowering human capital and raising physical capital accumulation. Our study suggests that the empirical difficulty to identify a monotonic relationship between inequality and aggregate growth reflects differences in the relative importance of human and physical capital in a country’s production structure.

The paper investigates the effects of temporary consumption tax cuts for selected durables in Turkey in 2009 using firm-level data. Our empirical strategy exploits variation in firm exposure to the tax cuts and at the same time controls for unobserved industry- and region-specific shocks to address potential endogeneity. Using data on the change of sales of firms that benefited from this measure and of those that did not over different periods, we find positive and robust effects of consumption tax cuts on the change of firm sales. In line with theoretical predictions, we also find a reversal of these effects following the expiration of the tax cuts.

This study examined the symmetry and asymmetry of the exchange rate-stock price nexus for 54 firms listed on the Nigerian Stock Exchange (NSE). We employed asymmetric Auto Regressive Distributed La...

This paper investigates the influence of environmental regulation on firm performance, as captured by firm productivity and firm exports. We first construct a Melitz-style model investigating the c...

An understudied outcome of foreclosure crises is how their aftershocks affect partisan elections. Two hypotheses are that partisan shifts may occur in neighborhoods with concentrated foreclosures because of (1) declines in turnout among liberal leaning voters or (2) swells of anti-incumbency among all voters. This research explores these hypotheses in Maricopa County, Arizona, by using econometric modeling to uncover associations among neighborhood foreclosures, voter turnout, and changes in the Republican vote share between the 2006 and the 2010 Arizona gubernatorial and U.S. Senate elections. Our results show evidence of (1) anti-incumbent voting behavior and more liberal shifts among neighborhoods harder hit by foreclosures and (2) conservative shifts in neighborhoods experiencing African-American and Latinx population growth. These findings are suggestive of a link between neighborhood housing market distress and neighborhood partisan shifts, which in aggregate may shape state and national policymaking and future neighborhood conditions.

We investigate the impact of superstition on prices paid by Chinese-American home buyers. Chinese consider 8 lucky and 4 unlucky. Lacking explicit buyer ethnicity identifiers, we develop a binomial...

In this paper, we investigate the relationship between energy poverty and economic development in India and its trend over a decade. For this purpose, we estimate a Multidimensional Energy Poverty Index (MEPI) and an index of development at the district level using household level data. Empirical results show that energy poverty is quite extensive in India with substantial variations across the states and districts. Over the years, energy poverty shows a declining trend at all-India level, but with the exception of few bigger and less developed states. Further, the study records a negative relationship between economic development and energy poverty, the strength of relationship has increased during the study period. Among the components of economic development, education has a greater impact on reducing energy poverty compared with income. The study observes that energy poverty and socio-economic backwardness in India are highly correlated; Dalits and Adivasis have higher energy poverty and a lower rate in the reduction of energy poverty in comparison with the national average. Energy poverty is lower in urban India in comparison with rural India.

The effects of large banks on the real economy are theoretically ambiguous and politically controversial. I identify quasi-exogenous increases in bank size in postwar Germany. I show that firms did...

This paper examines the presence of labour market imperfections in France, that lead to market power on the side of either firms or their workforce, and investigates the role of import competition as a possible discipline device. Using information on a large panel of French manufacturing firms, we find that Chinese competition lowers the positive gap between actual wages and the level that would prevail under perfect competition, thus strengthening firms’ position. This adjustment does not take place via a fall in wages, but rather through an increase in productivity. Finally, import competition compresses price-cost margins and induces quality upgrading among French manufacturers.

This paper uses firm-level data and a news-based measure of economic policy uncertainty to provide empirical evidence that economic policy uncertainty has a negative impact on firm-level investment in South Africa. Firms’ investment decisions in response to uncertainty reflect firms’ heterogeneity. Medium-sized firms and, to a different extent, small firms reduce their investment by much more than large firms in response to increased policy uncertainty. The relationship between firms categorized by size and the degree of financial constraints they face implies that financially constrained firms are more sensitive to uncertainty than large, unconstrained firms.

We study the impact of financial market development on the allocation of agricultural factors in China, using national household-level survey data from 2010 to 2014. Our empirical results show the following: (1) the prices of capital and labor are negatively distorted, whereas the price of land is positively distorted; (2) the east region of China has the lowest efficiency of agricultural factor allocation; (3) the breadth of financial market development improves the agricultural factor allocation in all three regions in China, whereas the depth of financial market development only enhances the agricultural factor allocation in the west region of China. Our study presents the very first microlevel evidence on the extent of agricultural factor misallocation in China. Moreover, our results inform policymakers’ choice of prioritizing whether the breadth or the depth of the financial market alleviates agricultural factor misallocation.

In this chapter, the impacts of corporate governance mechanisms on accounting conservatism are examined by using a sample that includes 85 non-financial firms quoted in Borsa Istanbul during the years of 2013 to 2018. The results of empirical analysis indicate that board size, board independency, institutional ownership, and firm size are positively related with accounting conservatism. However, leverage is negatively related with accounting conservatism, while there is no statistically significant association between CEO duality and accounting conservatism. This chapter contributes to limited literature on the association between accounting conservatism practices and corporate governance in the emerging market.

We study the productivity level distributions of manufacturing firms in France and Germany, and how these distributions evolved across the Great Recession. We show the presence of a systematic productivity advantage of German firms over French ones in the decade 2003-2013, but the gap has narrowed down after the Great Recession. Convergence is explained by the better growth performance of French firms in the post-recession period, especially of those located in the top percentiles of the productivity distribution. We also highlight the role of sectoral growth, firm size and export intensity in explaining the above convergence. In contrast, the contribution of allocative efficiency was small.

International audience; This paper studies the impact of uncertainty on cross-border investments. We build a data-set of firm-level outward Foreign Direct Investments between 2000 and 2015. We create a time and country varying measure of uncertainty based on the dispersion of idiosyncratic investment returns. An increase in uncertainty delays cross-border flows to the affected country. Yet, this average effect hides strong heterogeneity. Firms with low ex-ante performance durably reduce their foreign investments. Meanwhile high-performing firms increase their investments after the initial shock. We interpret these results as the evidence of a cleansing effect of uncertainty shocks among multinational firms in the presence of financial frictions. © 2020