The causal effect of restrictive bank lending on employment growth: A matching approach

Kleemann, Michael and Wiegand, Manuel (2013): The causal effect of restrictive bank lending on employment growth: A matching approach.

Abstract

Does restrictive bank lending cause lower employment growth at the firm-level or does it reflect firm characteristics that drive the deterioration of employment figures? Applying propensity score matching, we estimate the treatment effect of restrictive bank lending on employment growth. Combining balance sheet information and survey data on a firm's current and expected future business situation, we rule out the impact of firm heterogeneity. We find that credit constraints have a significant negative effect on employment growth. Restricted firms also apply for short-time work more often, but this effect is small and not significant in all estimations.

• Item Type: MPRA Paper
• Language: English
• Keywords: Credit financing; Employment; Financial crisis; Access to credit
• Subjects: J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J63 - Turnover ; Vacancies ; Layoffs; G - Financial Economics > G3 - Corporate Finance and Governance > G31 - Capital Budgeting ; Fixed Investment and Inventory Studies ; Capacity; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; G - Financial Economics > G0 - General > G01 - Financial Crises; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J23 - Labor Demand

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