Do Credit Supply Shocks Affect Employment in Middle-Income Countries?

This paper studies the extent to which increases in bank credit supply available for small and medium firms can foster formal employment in Mexico. We use a detailed dataset containing loan-level information for all loans extended by commercial banks to private firms in Mexico during the 2010-2016 p...

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Autores principales: Gutiérrez, Emilio, Jaume, David, Tobal, Martín
Formato: Articulo Documento de trabajo
Lenguaje:Inglés
Publicado: 2021
Materias:
Ciencias Económicas
Credit supply shocks
Local labor market
Formal employment
Acceso en línea:http://sedici.unlp.edu.ar/handle/10915/115482
https://www.cedlas.econo.unlp.edu.ar/wp/no-277/
Aporte de:
SEDICI (UNLP) de Universidad Nacional de La Plata
id I19-R120-10915-115482
record_format dspace
institution Universidad Nacional de La Plata
institution_str I-19
repository_str R-120
collection SEDICI (UNLP)
language Inglés
topic Ciencias Económicas
Credit supply shocks
Local labor market
Formal employment
spellingShingle Ciencias Económicas
Credit supply shocks
Local labor market
Formal employment
Gutiérrez, Emilio
Jaume, David
Tobal, Martín
Do Credit Supply Shocks Affect Employment in Middle-Income Countries?
topic_facet Ciencias Económicas
Credit supply shocks
Local labor market
Formal employment
description This paper studies the extent to which increases in bank credit supply available for small and medium firms can foster formal employment in Mexico. We use a detailed dataset containing loan-level information for all loans extended by commercial banks to private firms in Mexico during the 2010-2016 period, when the economy was relatively stable. To obtain exogenous variation in credit supply, we exploit differences in the regional presence of Mexican banks across local labor markets by combining pre-existing market shares with national-level changes in banks’ credit supply, after accounting for local credit demand shocks. Then, we use employment registry data to compare changes in the number of formal workers registered by small and medium firms in local labor markets differently exposed to these shocks. We find that credit supply shocks have a large impact on formal employment: a positive credit shock of one standard deviation increases yearly employment growth by 0.45 percentage points (13 percent of the mean). Our results differ from the null to small effects identified by previous literature for developed countries, suggesting that credit supply shocks play a more prominent role for employment creation (and destruction) in low and middle-income countries.
format Articulo
Documento de trabajo
author Gutiérrez, Emilio
Jaume, David
Tobal, Martín
author_facet Gutiérrez, Emilio
Jaume, David
Tobal, Martín
author_sort Gutiérrez, Emilio
title Do Credit Supply Shocks Affect Employment in Middle-Income Countries?
title_short Do Credit Supply Shocks Affect Employment in Middle-Income Countries?
title_full Do Credit Supply Shocks Affect Employment in Middle-Income Countries?
title_fullStr Do Credit Supply Shocks Affect Employment in Middle-Income Countries?
title_full_unstemmed Do Credit Supply Shocks Affect Employment in Middle-Income Countries?
title_sort do credit supply shocks affect employment in middle-income countries?
publishDate 2021
url http://sedici.unlp.edu.ar/handle/10915/115482
https://www.cedlas.econo.unlp.edu.ar/wp/no-277/
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