01954cas a2200265 a 4500 AALejournalIMF017533 230101c9999 xx r poo 0 0eng d 5.00 USD 9781475588668 1018-5941 BD-DhAAL BD-DhAAL Dorr, Sebastian. Credit-Supply Shocks and Firm Productivity in Italy / Sebastian Dorr, Mehdi Raissi, Anke Weber. Washington, D.C. : International Monetary Fund, 2017. 1 online resource (29 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The Italian economy has been struggling with low productivity growth and bank balance sheet strains. This paper examines the implications for firm productivity of adverse shocks to bank lending in Italy, using a novel identification scheme and loan-level data on syndicated lending. We exploit the heterogeneous loan exposure of Italian banks to foreign borrowers in distress, and find that a negative shock to bank credit supply reduces firms' loan growth, investment, capital-to-labor ratio, and productivity. The transmission from changes in credit supply to firm productivity relates to labor market rigidities, which delay or distort the adjustment of firms' desired labor and capital allocations, and thereby reduce firms' productivity. Effects are stronger for firms with higher capital intensity and external financial dependence. Mode of access: Internet Raissi, Mehdi. Weber, Anke. IMF Working Papers; Working Paper ; No. 2017/067 Full text available on IMF http://elibrary.imf.org/view/journals/001/2017/067/001.2017.issue-067-en.xml IMF e-Library