nep-bec New Economics Papers
on Business Economics
Issue of 2019‒01‒21
thirteen papers chosen by
Vasileios Bougioukos
Bangor University

  1. Credit constraints and firm exports: Evidence from SMEs in emerging and developing countries By Filomena Pietrovito; Alberto Franco Pozzolo
  2. Globalization and State Capitalism: Assessing Vietnam's Accession to the WTO By Leonardo Baccini; Giammario Impullitti; Edmund J. Malesky
  3. From Population Growth to Firm Demographics: Implications for Concentration, Entrepreneurship and the Labor Share By Hugo Hopenhayn; Julian Neira; Rish Singhania
  4. Impact of the Brexit vote announcement on long-run market performance By Wael Bousselmi; Patrick Sentis; Marc Willinger
  5. Productivity and Resource Misallocation: Evidence from Firms in Middle East and North Africa (MENA) Region Countries By Eleftherios Giovanis; Oznur Ozdamar
  6. The Origins of Firm Heterogeneity: A Production Network Approach By Andrew B. Bernard; Emmanuel Dhyne; Glenn Magerman; Kalina Manova; Andreas Moxnes
  7. Identifying credit supply shocks with bank-firm data: methods and applications By Hans Degryse; Olivier De Jonghe; Sanja Jakovljevic; Klaas Mulier; Glenn Schepens
  8. The Political Economyof Too-Big-To-Fail By J. Atsu Amegashie
  9. Financial Markets, Industry Dynamics, and Growth By Maurizio Iacopetta; Raoul Minetti; Pietro Peretto
  10. Unconventional monetary policy and productivity: Evidence on the risk-seeking channel from US corporate bond markets By Silvia Albrizio; Marina Conesa; Dennis Dlugosch; Christina Timiliotis
  11. New Sources of Growth: The Role of Frugal Innovation and Transformational Leadership By Solikin M. Juhro; A. Farid Aulia
  12. Do Female Managers Help to Lower Within-Firm Gender Pay Gaps? Public Institutions vs. Private Enterprises By Magda, Iga; Cukrowska-Torzewska, Ewa
  13. When Opportunity Moves To Or Away From You: Mechanisms Linking Geographic, Economic, Institutional, And Social Space With Entrepreneurship, Innovation, And Business Performance By Jason Greenberg; Matt Marx

  1. By: Filomena Pietrovito (University of Molise); Alberto Franco Pozzolo (University of Molise and Centro Studi Luca d'Agliano)
    Abstract: We study the relationship between credit contraints and export behavior using a large and heterogeneous sample of small and medium size firms from 65 emerging and developing countries between 2003 and 2014. We measure credit contraints by means of each firm's self-assessment of whether it is credit rationed, and we follow an instrumental variable approach that uses firm-level instruments to address the potential endogeneity of credit constraints with respect to export performance. We find robust evidence of a negative, statistically and economically significant effect of financial constraints on both the probability that a firm exports (the extensive margin of exports) and the share of exports over total sales (the intensive margin of exports).
    Keywords: export decisions; margin of exports; credit contraints; firm level
    JEL: D22 F10 F14
    Date: 2019–01–11
  2. By: Leonardo Baccini; Giammario Impullitti; Edmund J. Malesky
    Abstract: What do state-owned enterprises (SOEs) do? How do they respond to market incentives? Can we expect substantial efficiency gains from trade liberalization in economies with a strong presence of SOEs? Using a new dataset of Vietnamese firms we document a set of empirical regularities distinguishing SOEs from private _rms. Then we empirically study the effect of the 2007 WTO accession on selection, competition, and productivity. Our results show that WTO entry is associated with higher probability of exit, lower firm profitability, and substantial increases in productivity for private firms but not for SOEs. Our estimates suggest that the overall productivity gains would have been about 40% larger in a counterfactual Vietnamese economy without SOEs. We highlight some economic mechanisms possibly driving these findings through the lenses of a model of trade with heterogeneous private and state-owned firms. The model suggests that political/regulatory barriers to entry and access to credit are key drivers of the different response of SOEs to trade liberalization. Further empirical tests broadly validate these insights.
    Keywords: state-owned enterprises, state capitalism, heterogeneous firms, gains from trade, WTO, Vietnam
    JEL: F12 F13 F14 P31 P33
    Date: 2019–01
  3. By: Hugo Hopenhayn; Julian Neira; Rish Singhania
    Abstract: The US economy has undergone a number of puzzling changes in recent decades. Large firms now account for a greater share of economic activity, new firms are being created at a slower rate, and workers are getting paid a smaller share of GDP. This paper shows that changes in population growth provide a unified quantitative explanation for these long-term changes. The mechanism goes through firm entry rates. A decrease in population growth lowers firm entry rates, shifting the firm-age distribution towards older firms. Heterogeneity across firm age groups combined with an aging firm distribution replicates the observed trends. Micro data show that an aging firm distribution fully explains i) the concentration of employment in large firms, ii) and trends in average firm size and exit rates, key determinants of the firm entry rate. An aging firm distribution also explains the decline in labor’s share of GDP. In our model, older firms have lower labor shares because of lower overhead labor to employment ratios. Consistent with our mechanism, we find that the ratio of nonproduction workers to total employment has declined in the US.
    JEL: E13 E20 J11 L16 L26
    Date: 2018–12
  4. By: Wael Bousselmi (CREST - Centre de Recherche en Economie et Statistique [Bruz] - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz]); Patrick Sentis (MRM - Montpellier Research in Management - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - UM2 - Université Montpellier 2 - Sciences et Techniques - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier); Marc Willinger (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)
    Abstract: We examine how the Brexit announcement influenced the long-run market performance of British and European listed firms. Using daily data and a sample composed of 3,015 European listed firms (805 UK and 2,210 non-UK), we find that, over a 12-month horizon, the Brexit announcement negatively affected the long-run market performance of UK firms (regardless of their business activities) and European non-British (non-UK hereafter) firms that conduct most of their business activities within the British area. We also provide evidence that, after the Brexit announcement, analysts' earnings forecasts and the realized accounting decreased and the return volatility increased for UK firms
    Keywords: Brexit,buy-and-hold,event study,financial market,macroeconomic news
    Date: 2018–12–14
  5. By: Eleftherios Giovanis (Manchester Metropolitan University, Business School); Oznur Ozdamar
    Abstract: Resource reallocation from low to high productivity firms can generate large aggregate productivity gains with further potential benefits to economic growth. This study examines the productivity and resource misallocation in a sample of countries in the Middle East and North Africa (MENA) region and Turkey. The analysis relies on data derived from the World Bank Enterprise Surveys over the period 2008-2016 of firms in Egypt, Turkey and Yemen. Furthermore, in the analysis we include various firm characteristics, and we explore major state-business relations (SBRs) and their association to resource misallocation. The results are mixed where in Egypt and Turkey female ownership and international quality are positively associated with productivity and allocation efficiency, while in all cases obstacles in SBRs present a negative and significant correlation with the firms’ performance and productivity, reducing the allocation efficiency and increasing the dispersions on output and capital
    Date: 2018–12–10
  6. By: Andrew B. Bernard; Emmanuel Dhyne; Glenn Magerman; Kalina Manova; Andreas Moxnes
    Abstract: This paper quantifies the origins of firm size heterogeneity when firms are interconnected in a production network. Using the universe of buyer-supplier relationships in Belgium, the paper develops a set of stylized facts that motivate a model in which firms buy inputs from upstream suppliers and sell to downstream buyers and final demand. Larger firm size can come from high production capability, more or better buyers and suppliers, and/or better matches between buyers and suppliers. Downstream factors explain the vast majority of firm size heterogeneity. Firms with higher production capability have greater market shares among their customers, but also higher input costs and fewer customers. As a result, high production capability firms have lower sales unconditionally and higher sales conditional on their input prices. Counterfactual analysis suggests that the production network accounts for more than half of firm size dispersion. Taken together, our results suggest that multiple firm attributes underpin their success or failure, and that models with only one source of firm heterogeneity fail to capture the majority of firm size dispersion.
    Keywords: Production networks, productivity, firm size heterogeneity.
    Date: 2019–01
  7. By: Hans Degryse (KU Leuven, Halle Institute for Economic Research, and CEPR); Olivier De Jonghe (National Bank of Belgium and Tilburg University); Sanja Jakovljevic (Lancaster University); Klaas Mulier (Ghent University and National Bank of Belgium); Glenn Schepens (European Central Bank)
    Abstract: Current empirical methods to identify and assess the impact of bank credit supply shocks rely strictly on multi-bank firms and ignore firms borrowing from only one bank. Yet, these single-bank firms are often the majority of firms in an economy and most prone to credit supply shocks. We propose and underpin an alternative demand control (using industry-location-size-time fixed effects) that allows identifying timevarying cross-sectional bank credit supply shocks using both single- and multi-bank firms. Using matched bank-firm credit data from Belgium, we show that firms borrowing from banks with negative credit supply shocks exhibit lower financial debt growth, asset growth, investments, and operating margin growth. Positive credit supply shocks are associated with bank risk-taking behaviour at the extensive margin. Importantly, to capture these effects it is crucial to include the single-bank firms when identifying the bank credit supply shocks.
    Keywords: credit supply identificationbank lendingcorporate investmentbank risk-taking
    JEL: G21 G32
    Date: 2018–10
  8. By: J. Atsu Amegashie
    Abstract: I consider a two-period model in which being “too big” is only a necessary condition for an insolvent firm to receive a government bailout because, in addition to meeting a threshold asset size, the firm must engage in a lobbying contest in order to be bailed out. The firm has a political advantage because its probability of winning the contest is increasing in its size. When the firm experiences an unfavorable price shock, I find that the balance between the size of the requisite bailout and the firm's political advantage of being "too big to fail" determines the firm’s probability of getting a bailout. Surprisingly but consistent with the US government’s differential treatment of Lehman Brothers and Bear Stearns during the 2008-2010 financial crisis, I find that a smaller firm may receive a bailout while a bigger firm will not, although both firms meet the threshold size of “too big to fail” and a firm's political advantage is increasing in its size.
    Keywords: insolvency, bail-out, biased contest, political advantage, too-big-to-fail
    JEL: O10 P16 P48
    Date: 2018
  9. By: Maurizio Iacopetta (OFCE - OFCE - Sciences Po); Raoul Minetti; Pietro Peretto
    Abstract: This paper introduces corporate governance frictions into a growth model with endogenous market structure. Managers engage in corporate resource diversion and empire building. Shareholders discipline managers with incentive compensation contracts. A reform that mitigates corporate governance frictions boosts firms' entry and,
    Date: 2018
  10. By: Silvia Albrizio; Marina Conesa; Dennis Dlugosch; Christina Timiliotis
    Abstract: We examine the relationship between lax monetary policy, access to high-yield bond markets and productivity in the US between 2008 and 2016. Using monetary policy surprises, obtained from changes in interest rates futures in narrow windows around FOMC announcements, we isolate the increased access to high-yield bond markets relative to investment-grade bond markets that is due to unconventional monetary policy (UMP). We find that through the risk-taking channel, UMP has increased investors’ appetite for high-yield US corporate bonds, thereby increasing access to high-yield bond markets for firms with a higher risk profile. Since the relationship between credit ratings and firm-level productivity is U-shaped, the aggregate effect on productivity is a priori unclear. Turning to the real economy, we thus analyse whether this additional access to finance had an effect on aggregate productivity by altering the reallocation of resources across firms. Our results show that unconventional monetary policy induced less investment in tangible capital by high-productive firms. However, before drawing conclusions on the net effects of UMP on aggregate productivity, we discuss a number of issues that this paper could not deal with due to data limitations, including prominently whether this apparent misallocation may have been offset by a shift in the composition of investments towards more intangible investment.
    Keywords: bond markets, capital reallocation, productivity, Unconventional monetary policy, United States
    JEL: F23 D22 O33 D24 E52 G21 G32 G33 J63 O16 O47
    Date: 2019–01–14
  11. By: Solikin M. Juhro (Bank Indonesia); A. Farid Aulia (Bank Indonesia)
    Abstract: Untuk dapat bangkit dari permasalahan pasca krisis dan tumbuh secara berkesinambungan, ekonomi suatu negara dituntut untuk mampu beradaptasi dengan perkembangan baru, yang tidak hanya VUCA (Volatile, Uncertain, Complex, and Ambiguous) namun sudah TUNA (Turbulent, Uncertain, Novel, and Ambiguous). Negara dituntut untuk berinovasi, mendayagunakan teknologi yang terus berubah secara kontinu dan eksponensial, serta menciptakan sumber pertumbuhan ekonomi baru yang mampu mendongkrak kesejahteraan masyarakat luas. Hal ini menuntut karakter kepemimpinan transformatif untuk mampu mendorong frugal innovation yang berdampak dan berkelanjutan, yang dapat dijadikan sebagai strategic driver pertumbuhan ekonomi ke depan. Hasil analisis menyimpulkan mengenai pentingnya peran kualitas inovasi dan potensi kepemimpinan sebagai sumber pertumbuhan ekonomi baru. Penelitian ini juga menawarkan pendekatan baru, yaitu Breakthrough Possibility Frontier (BPF) untuk memperlihatkan peran transformational leadership dengan kemampuan melakukan breaktrough dalam mendorong game changing frugal innovation sebagai strategic driver pertumbuhan ekonomi.
    Keywords: pertumbuhan ekonomi, inovasi, frugal innovation, transformational leadership, Breaktrough Possibility Frontier
    JEL: O30 O15 O40 M50
    Date: 2018–08
  12. By: Magda, Iga (Warsaw School of Economics); Cukrowska-Torzewska, Ewa (University of Warsaw)
    Abstract: We analyze the link between the presence of female managers and the size of the firm-level gender pay gap, looking separately at the private and public sector. Using a large linked employer-employee dataset for Poland and a non-parametric and parametric decompositions, we find that higher presence of female managers is associated with more pay advantage towards women in selected types of public sector units: the ones in which remunerations of women and men are already equal, and a large share of the workforce is tertiary-educated. The effects are, however, relatively small in size. In private establishments, lower gender wage inequality is associated with higher shares of female workers, but not female managers.
    Keywords: gender wage gap, wage inequalities, public sector, female managers, Ñopo decomposition, Oaxaca- Blinder decomposition
    JEL: J16 J31 J45
    Date: 2018–12
  13. By: Jason Greenberg; Matt Marx
    Abstract: This technical document provides an assessment of of firm age, and of minority and female-firm ownership in the Census Bureau microdata by by statistically comparing Dunn and Bradstreet (henceforth also referred to as "D&B") data with relevant data from various US Census programs. The D&B data include company profiles for millions of US. and international firms, both public and private. Because the data comprise the basis of D&B's service offerings, considerable resources are invested in its coverage and accuracy. Though not expected to be as complete as the Economic Census ("EC"), Longitudinal Business Database ("LBD"), and Longitudinal Employer-Household Dynamics ("LEHD") data, the coverage in the D&B data is extensive. For this study we have constructed extracts of company information for minority and female owned companies located in states for which LEHD are available. The D&B date were then linked to the Census business register ("SSEL/BR") using name and address matching techniques discussed in greater detail in the original PPS and associated proposal.
    Date: 2017–04

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