Using firm-level survey information, we investigate whether relationship lending affects firms’ employment decisions in the face of negative sales shock. We find that firms with a durable relationship with their main bank display significantly less employment growth sensitivity to such shocks, especially where these are transitory. The result is stronger for younger and smaller firms which benefit from tighter bank-firm relationships, and for firms in sectors or economic environments where the costs of employment adjustment are greater. Our findings indicate that relationship lending provides liquidity insurance to firms to meet their demand for labor hoarding.

Relationship lending and employment decisions in firms’ bad times / Murro, Pierluigi; Oliviero, Tommaso; Zazzaro, Alberto. - In: JOURNAL OF FINANCIAL AND QUANTITATIVE ANALYSIS. - ISSN 0022-1090. - (In corso di stampa), pp. 1-55. [10.1017/S0022109022000928]

Relationship lending and employment decisions in firms’ bad times

Pierluigi Murro
;
In corso di stampa

Abstract

Using firm-level survey information, we investigate whether relationship lending affects firms’ employment decisions in the face of negative sales shock. We find that firms with a durable relationship with their main bank display significantly less employment growth sensitivity to such shocks, especially where these are transitory. The result is stronger for younger and smaller firms which benefit from tighter bank-firm relationships, and for firms in sectors or economic environments where the costs of employment adjustment are greater. Our findings indicate that relationship lending provides liquidity insurance to firms to meet their demand for labor hoarding.
Relationship lending and employment decisions in firms’ bad times / Murro, Pierluigi; Oliviero, Tommaso; Zazzaro, Alberto. - In: JOURNAL OF FINANCIAL AND QUANTITATIVE ANALYSIS. - ISSN 0022-1090. - (In corso di stampa), pp. 1-55. [10.1017/S0022109022000928]
File in questo prodotto:
File Dimensione Formato  
version26.pdf

Solo gestori archivio

Tipologia: Documento in Post-print
Licenza: Tutti i diritti riservati
Dimensione 320.94 kB
Formato Adobe PDF
320.94 kB Adobe PDF   Visualizza/Apri
Pubblicazioni consigliate

Caricamento pubblicazioni consigliate

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11385/219480
Citazioni
  • Scopus 0
  • ???jsp.display-item.citation.isi??? ND
social impact