Do Credit Supply Shocks Affect Employment in Middle-Income Countries?
American Economic Journal: Economic Policy
vol. 15,
no. 4, November 2023
(pp. 1-36)
Abstract
This paper studies the effect of bank credit supply shocks on formal employment in Mexico using a proprietary dataset containing information on all loans extended to firms by commercial banks during 2010–2015. We find large impacts on the formal employment of small and medium firms: a positive credit shock of 1 standard deviation increases yearly employment by 1.4 percentage points. The shares of uncollateralized credit and credit received by family firms, younger firms, and firms with no previous bank relationships also increase, suggesting that credit shocks may play a more prominent role for employment creation in credit-constrained settings.Citation
Gutierrez, Emilio, David Jaume, and Martín Tobal. 2023. "Do Credit Supply Shocks Affect Employment in Middle-Income Countries?" American Economic Journal: Economic Policy, 15 (4): 1-36. DOI: 10.1257/pol.20210354Additional Materials
JEL Classification
- D22 Firm Behavior: Empirical Analysis
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- J23 Labor Demand
- L25 Firm Performance: Size, Diversification, and Scope
- M51 Personnel Economics: Firm Employment Decisions; Promotions
- O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
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