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Estimating causal impacts under complex conditions: Two applications in presence of multiple fixed effects and continuous multidimensional treatmentsCristofoletti, Enrico 05 October 2021 (has links)
This thesis is a collection of three essays in causal evaluation. The first chapter investigates the effects of formal ties between firms and banks on the amount of credit received. I focus on the micro-effects of ties (bank-firm level) and how they reverberate at the macro level. Results are consistent with the literature considering links as a source of favoritism. However, efficient firms are more likely to be connected to banks, thus benefiting more often than less efficient firms from connections. The comparison of Portugal’s GDP in 2017 with that produced under a hypothetical scenario where every tie was severed shows that severing links results in virtually no changes in GDP. I interpret the result as evidence that the different likelihood of being connected experienced by efficient and not efficient firms counterbalances the misallocating potential of connections.The second chapter introduces a novel Stata implementation of Egger and von Ehrlich’s (2013) econometric framework for the estimation of treatment effect when the treatment is continuous and multidimensional. After the illustration of the package, I present a simple simulation to show the capability of the method to overcome bias.The third chapter consists of an evaluation of European regional policy. It analyzes how different mixes of investments in infrastructure and productive investments affect regions’ growth rate. The main results are that allocations in infrastructure foster growth only when coupled with expenditures in productive investments. Moreover, the highest growth is obtained when investments have high intensity in both dimensions. By generating two hypothetical scenarios, I investigate how the allocation of funds can be improved. The results show that regions could allocate more efficiently. However, the actual transfer intensity is not enough to choose the mix that would globally maximize growth. The findings are consistent with Becker et al. (2012) since enforcing common support restricts the analysis to regions with low transfer intensity.
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中國大陸延攬海外高層次人才之資源錯置 / The Allocative Efficiency of Thousand Talents Program邱世憲, Chiu, Shih Hsien Unknown Date (has links)
本研究使用多種資料蒐集方法,對全球經濟大國中國大陸海外高層次人才引進計畫(簡稱千人計畫)之數據資料進行量化分析,本研究針對千人計畫第一批至第五批部分專家學者,分析在2009年至2014年間透過此計畫資源投入的整體學術研究產出效率,並進一步討論不同研究機構在資源獲得及學術產出效率上的差異。模型運算結果後發現,首先,國家自然科學基金在千人計畫研究經費配置上明顯偏向國家研究機構,其次,國家研究機構不論在研究產出效率或生產力指標上表現都較中國大學佳,這樣的結果說明了,千人計畫資源錯置的情況確實存在,若集中研究資源並合理配置給國家研究機構進行研發創新,將資源分配給產值高、研究成果豐碩的學者們,這樣對於中國科學領域巨額投入的回報只會有增無減。本文至此,可對中國菁英階層主導的千人計畫政策,就學術產出效率層面,建議最適的人力資本投資方向,以期能避免嚴重的資源錯置問題,並且對後續相關研究者有所助益。 / This research measures the resource misallocation of human capital development in China. We create a dataset composed of Chinese repatriate researchers of the first to fifth groups of Thousand Talent program scientists during 2009 - 2014. The result shows that National Research Institutions have long outperformed university in productivity and research output efficiency. This research; thus, contribute to evaluate the impact brought about by China's overseas high-level talents’ introduction policy via quantitative analyses and propose a variety of data collection techniques to create a reliable dataset for future research.
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以專利衡量研發創新投入之資源錯置問題 -以中國東部沿海地區製造業廠商為例 / Misallocation of R&D Inputs by Using Patent Value Index - A Case of the Manufacturing Companies Located in Eastern China李姵儀 Unknown Date (has links)
專利和創新是近年產業發展極重要的趨勢,但是在過去對於中國產業的資源錯置相關研究中,卻沒有發現以專利來做為衡量產出的標準。因此本研究蒐集了中國2005到2007年的水準以上製造業廠商資料,並將Mtrends專利檢索平台資料庫中之專利資料加以整合,建構出中國水準以上製造業廠商之美國專利資料的資料庫。並依據文獻所提出之資源錯置模型,以資料庫中之專利資料作為創新研發產出之代表,計算出廠商之效率值與資源錯置的程度。根據廠商之專利數量及專利價值指標兩種衡量方式來討論中國東部沿海三大經濟區,環渤海經濟區、長三角經濟區及珠三角經濟區之效率值及資源錯置問題。研究結果發現珠三角經濟區因開放年代較早,在人力及知識累積下,研發效率值相對較高,資源錯置問題亦相對較不嚴重的,而長三角與環渤海經濟區由於產業多集中於高科技產業,部分廠商之技術尚未成熟,因此在研發效率值的表現上較為落後且資源錯置問題亦相對較為嚴重。 / Innovation and patent applications have become the central issue for the industrial development nowadays. In the past, there’s little research to measure the innovation outputs by patents. Thus, in this paper, I collected the data for the manufacturing firms in China from 2005 to 2007 and combine with the patent data in Mtrends database. Based on my misallocation computation, I use patent as the R&D output and measure the innovation efficiency and the misallocation level. Based on my result, the efficiency is higher in Pearl River Delta Economic Zone due to its earlier development and low in Bohai Bay Economic Zone & Yangtze River Delta Economic Zone because of industrial concentration. Thus, the misallocation is much more severe in Bohai Bay Economic Zone & Yangtze River Delta Economic Zone and is much lighter in Pearl River Delta Economic Zone.
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創新創業市場與資源錯置:以創投投資電子產業研發效率為例 / Resource Misallocation in New Ventures : The Case of Innovation Investment in ICT Industry陳郁喬, Chen, Yu-Chiao Unknown Date (has links)
隨著經濟全球化的發展,創新創業在國際競爭的地位越來越重要,創新不僅是國家經濟增長的動力,也是企業長期競爭力的關鍵。我國創業投資在電子產業快速發展進程中,扮演緩解新創企業融資障礙的重要角色。近期各項經濟數據均顯示,伴隨國家產業創新政策,電子新創企業在研發投入過程中有嚴重的資源錯置問題。本研究以台灣創投投資電子產業之研發效率為例,研究結果證實電子新創企業於首次公開發行期間具研發效率不足現象,主要原因為企業致力於美化財報,提高資本支出以利當期產出反應高財務績效,而抑制研發投入作為上市(櫃)經營策略。 / Innovation activities have long been accredited by its crucial role to sustain continuous long-term economic growth. Recent studies nonetheless suggested severe problems of input misallocation associated with innovation investment. This research measures input misallocations of venture capital supported business and identified significant underinvestment of new ventures right before their initial public offerings (IPOs). This is because new ventures have the incentives to adjust the reported earnings by cutting the R&D investment that is supposed to cut the current expense but not to affect short-term operational performance in the market. Therefore, new ventures would typically incur underinvestment in innovation activities right before IPOs.
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Essays on the macroeconomics of labor market and firm dynamicsGoudou, Felicien Jesugo 08 1900 (has links)
Cette thèse contribue à la compréhension des frictions sur le marché de travail et comment ces frictions affectent les agrégats macroéconomiques comme le chômage et la productivité. Elle jette également un regard critique sur les politiques environnementales telles que la taxe carbone et le financement vert. Le premier chapitre examine comment les contrats de non-competition signés entre employeurs et employés affectent le chômage, la productivité et le bien-être des agents dans l'économie. Ces contrats stipulent que l'employé travaillant sous ceux-ci ne doit en aucun cas travailler pour un employeur concurrent; et ce pour une période déterminée allant de un à deux ans après séparation avec son premier employeur. Ce type de contrat est récurrent aux Etats-Unis et affecte au moins un employé sur cinq dans ce pays. Les résultats des analyses montrent qu'une forte incidence effective de ces contrats peut non seulement comprimer les salaires mais générer du chômage. Ceci est essentiellement dû au fait que certaines personnes ayant signé ce contrat ont du mal à se trouver un nouvel emploi après s'être séparées de leur premier travail. L'article propose de baisser la durée des restrictions d'emploi de ces contrats dans le but d'amoindrir leur effets sur les travailleurs. Cependant, il est à noter que ces contrats sont en partie bénéfiques du fait de l'incitation pour les employeurs de former les employés sur le marché du travail, augmentant la productivité totale. Parlant de contrats d'emploi, le deuxième chapitre évalue les implications de la coexistence de contrats dits temporaires (contrat à durée déterminée) et permanents (contrat à durée indéterminée) sur le flux des travailleurs entre chômage, emploi et non-participation au marché du travail durant le cycle de vie des agents. Cette analyse revêt une importance particulière du fait des effets de ces flux de travailleurs sur l'emploi agrégé et les salaires durant le cycle de vie des agents. Il en ressort que les transitions des individus d'un emploi permanent au chômage sont le plus important facteur expliquant l'emploi agrégé durant le cycle de vie des agents. Toute politique visant à augmenter l'emploi devrait cibler ce flux de travailleurs. Par ailleurs, la transition des individus d'un emploi temporaire vers le chômage se révèle être significatif dans l'explication du faible emploi des jeunes dans les pays européens comme la France, surtout pour ceux ayant un niveau d'éducation élevé. l'article va plus loin en construisant un model qui explique les profils de transitions observés durant le cycle de vie des agents et analyse comment les effets associés aux réformes de protection de l'emploi dans les pays européens sont distribués entre les travailleurs selon leur niveau d'éducation et âge. Enfin, le troisième chapitre jette un regard critique sur les politiques environnementales comme la taxe sur les émissions générées par les unités de production et le financement vert. L'article montre qu'en dépit de leur efficacité dans la réduction des émissions, ces politiques peuvent impacter négativement l'allocation des ressources comme le capital entre les firmes, réduisant la productivité agrégée. Ceci provient du fait que certaines entreprises très productives mais financièrement contraintes peuvent avoir des difficultés à investir dans la technologie de réduction de leurs émissions carbone alors que d'autres moins productives que les premières mais très riches, investissent plus facilement. Le poids du fardeau fiscal lié aux emissions force les premières à quitter le marché réduisant la productivité. Ceci suggère que d'autres politiques comme celle de subventions vertes sont importantes pour réduire ces potentielles distortions. / This thesis contributes to understanding labor market frictions and how these frictions impact macroeconomic aggregates such as unemployment and productivity. It also critically examines environmental policies such as carbon taxes and green financing. The first chapter examines how non-compete contracts signed between employers and employees affect unemployment, productivity, and welfare in the economy. These contracts stipulate that the employee, while under contract, cannot work for a competing employer for a specified period, typically ranging from one to two years after separation from their initial employer. This type of contract is widespread in the United States and affects at least one in five employees in the country. Results show that a high enforceable incidence of these contracts can compress wages and generate unemployment. This is primarily due to the fact that some individuals who have signed such contracts face difficulties in finding new employment after separating from their initial job. The article proposes reducing the duration of the post-employment restrictions of these contracts to mitigate their effects on workers. However, it is worth noting that these contracts partially benefit employers by incentivizing them to invest in employee training, thereby increasing overall productivity. Speaking of employment contracts, the second chapter evaluates the implications of the coexistence of temporary contracts (fixed-term contracts) and permanent contracts (indefinite-term contracts) on worker flows between unemployment, employment, and labor force non-participation over the life-cycle. This analysis is particularly important due to the effects of these flows on aggregate employment and wages over the life-cycle. It is found that transitions of individuals from permanent employment to unemployment are the most significant factor explaining aggregate employment over the life-cycle. Any policy aimed at increasing employment should target this flow of workers. Moreover, the transition of individuals from temporary employment to unemployment is significant in explaining the low employment of young individuals in European countries like France, especially for those with higher levels of education. The article goes further by constructing a model that explains the observed transition profiles during agents' life-cycle and analyzes how the effects linked to employment protection reforms in European countries are distributed among workers based on their level of education and age. Finally, the third chapter provides a critical assessment of environmental policies such as emissions taxes on production units and green financing. The article shows that despite their effectiveness in reducing emissions, these policies can negatively impact resource allocation, such as capital, among firms, thus reducing aggregate productivity. This is because some highly productive but seriously financially constrained firms may struggle to invest in emission reduction technology, while less productive but wealthy entrepreneurs invest more easily. The burden of emissions-related fiscal measures forces the former to exit the market, thereby reducing productivity. This suggests that other policies, such as green subsidies, are important to mitigate these potential distortions.
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[en] ESSAYS ON BANKING / [pt] ENSAIOS EM ECONOMIA BANCÁRIASÉRGIO LEÃO 01 August 2018 (has links)
[pt] Esta tese é uma coleção de três ensaios empíricos em economia bancária no Brasil. O capítulo 1 mostra evidências que cidades governadas por prefeitos da base aliada do governo federal recebem mais crédito de bancos públicos federais. Utilizando uma base de dados longitudinal única que cruza informações de crédito em nível municipal com resultados eleitorais no período 1997-2008, eu exploro variações no alinhamento político de cada município ao longo do tempo para estimar seu impacto no montante de crédito. Como resultado, observo que os bancos públicos federais aumentam seus empréstimos em 10 por cento a mais em cidades alinhadas. Em resposta, os bancos privados restringem sua expansão de crédito nessas localidades, embora o efeito líquido seja de um aumento no crédito agregado para cidades alinhadas, deixando a questão de uma provável má alocação de capital entre cidades. Eu também utilizo outra base de dados de crédito única e ainda mais abrangente, disponível somente a partir de 2004, e emprego a metodologia de regressão com descontinuidade em disputas eleitorais apertadas para avaliar possíveis problemas de identificação. Em contraste com a literatura, eu observo que os resultados não são conduzidos por empréstimos direcionados, mas por operações de crédito livre. O capítulo 2 analisa firmas que contribuem para campanhas eleitorais de modo a testar a hipótese de favorecimento de crédito como retribuição a contribuição de campanha. Combinando dados de contribuição de campanha e informações de crédito ao nível da firma, eu exploro variações em uma mesma firma ao longo do tempo para testar se aquelas que contribuem para partidos da base aliada do governo federal recebem mais crédito de bancos públicos federais. Os resultados indicam que contribuintes de campanha de partidos da base aliada têm maior proporção de seu crédito oriundo de bancos públicos federais e tomam de uma maneira geral 20 por cento a mais de crédito que firmas que contribuem para outros partidos. No capítulo 3, eu aproveito da introdução de uma nova forma de seguro depósito voluntário, conhecido por DPGE (Depósito a Prazo com Garantias Especiais), para avaliar questões relevantes relativas a corrida bancária, liquidez de mercado (market liquidity) e liquidez na captação (funding liquidity). Primeiramente, documento uma corrida de depositantes a bancos pequenos e médios no Brasil após o agravamento da crise financeira global de 2008. A seguir, observo que esta corrida bancária foi impulsionada primordialmente por investidores institucionais. Em seguida, demonstro que, em resposta ao enfraquecimento da posição no seu passivo, os bancos reduziram seu ativo liquidando suas posições de crédito. Em quarto lugar, encontro evidências de que a introdução do DPGE ajudou a estabilizar as captações bancárias. Com este novo instrumento, os certificados de depósito (CD) passaram a ser segurados em até 20 milhões de reais, enquanto os demais eram segurados em até 60 mil reais. Por fim, demonstro que bancos com menor liquidez nos ativos foram aqueles que escolheram emitir DPGE, apesar de seu elevado custo (emissores devem pagar prêmio mensal de mais de seis vezes o valor cobrado em depósitos segurados convencionais). Portanto, restaurar a liquidez pelo lado do passivo (funding liquidity) foi mais importante a bancos mais afetados pela liquidez de mercado (market liquidity), ou seja, para aqueles com menos ativos líquidos. Uma investigação dos determinantes da emissão de DPGE mostra que: 1) bancos mais dependentes de cessão de carteira de crédito antes da crise estão mais propensos a emitir no novo esquema de depósito segurado; e 2) bancos com proporção mais elevada de crédito em relação ao ativo estão mais propensos a emitir sob o novo esquema, embora os resultados sejam menos precisos. Tais resultados são importantes por diversas razões. Primeiramente, estão entre os primeiros resultados empíricos a documentar a relação entre liquidez de mercado (ma / [en] This thesis is a collection of three empirical essays on banking using Brazilian data. Chapter 1 provides evidence that cities ruled by a mayor from the presidential coalition s party receive significantly more credit from public federally owned banks. Using a unique longitudinal database that matches branch-level credit information with election outcomes over the period 1997-2008, I explore the within-municipality variation in political alignment to estimate the impact of alignment on the amount of credit. I find that public federal banks increase their lending 10 per cent more in aligned cities. In response, private banks contract credit, but the net effect is an increase in aggregate credit to aligned cities, raising the issue of a misallocation of capital across cities. I also use another unique and more comprehensive credit database, available only since 2004, and apply a regression discontinuity design in close electoral races to address possible identification concerns. In contrast with the received literature, I find that the results are not driven by earmarked lending, but by non-earmarked operations. Chapter 2 focuses the analysis on firms that donate to electoral campaigns in order to test for the hypothesis of favored lending as a reward mechanism for campaign giving. I combine data from firm level campaign contributions with credit information and explore within-firm variation in order to test whether donating to aligned parties results in a better access to credit from public federal banks. Results indicate that campaign contributors to aligned parties have a higher lending share from public federal banks and borrow 20 per cent more than firms that donate to nonaligned parties. In Chapter 3 I take advantage of the introduction of a voluntary deposit insurance program to address several important questions concerning bank runs, market liquidity and funding liquidity. I first document a depositors run on small and medium banks in Brazil after the worsening of the global financial crisis. Second, I find that the bank run was led mainly by institutional investors. Third, I show that, in response to the weakening position on the liability side, banks responded by liquidating their credit position on the asset side of the balance sheet. Fourth, I find evidence that the introduction of a new voluntary insurance instrument called DPGE (Time Deposits with Special Insurance) seemed to have helped stabilize banks positions. Under DPGE, Certificates of Deposit (CD) are insured up to 20 million reais, while standard non-DPGE other time deposits are secured up to 60 thousand reais. Fifth, I show that banks whose assets were more illiquid selected themselves into expensive DPGE (issuers have to pay monthly premium of more than six times the value charged on conventionally insured deposits). Thus, providing funding liquidity was more important for banks that were more affected by market liquidity (having less liquid assets). An investigation of the determinants of issuing DPGE shows that: 1) banks that relied more on credit assignments before the crisis are more likely to issue under the new insurance scheme; 2) banks with higher credit-to-assets ratios are also more likely to issue under the new scheme, although the results on credit-to-assets are a little less precise. These results are important for several reasons. First, they are the first empirical results to document the relationship between market and funding liquidity. In particular, self-selecting into DPGE allows us to see that banks with more illiquid assets need more funding liquidity in the midst of a crisis. Second, the fact of the voluntary nature of the program is interesting per se. By providing voluntary, albeit expensive, insurance, banks may self-select only when they have little option (because of asset-side market illiquidity). Although I do not perform a full welfare analysis, this suggests that mandatory insurance may be sub-optimal for two reasons. First, banks that do not need it may be paying excessive premiums. Second, mandatory insurance may
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The real-estate component in the production process of non-financial firms : investment, employment and mobility / La composante immobilière dans le processus de production des entreprises : investissement, emploi et mobilitéRay, Simon 05 October 2016 (has links)
Cette thèse étudie différents mécanismes par lesquels l'immobilier des entreprises influe sur l'investissement, l'emploi et la mobilité des Sociétés Non-Financières (SNFs). L'actif immobilier représente une part très importante de la valeur de l'actif des entreprises et les locaux constituent souvent un des principaux postes de dépenses des SNFs. Les prix de l'immobilier ont un effet sur la valeur de l'actif que les entreprises peuvent déposer en garantie et sur le coût des facteurs de production. Dans le cadre d'un marché du crédit frictionnel, la capacité d'emprunt des entreprises peut être accrue par une hausse de la valeur de marché des actifs. Les deux premiers chapitres de cette thèse étudient cet effet de collatéral et ses conséquences sur l'investissement et l'emploi. Le premier chapitre présente une modélisation dynamique qui met l'accent sur le comportement des variables relatives au marché du travail. Le second chapitre explore les effets hétérogènes entre entreprises en analysant des données microéconomiques. Le dernier chapitre porte sur les conséquences des spécificités des coûts d'ajustement de l'immobilier. En étudiant le comportement de mobilité d'entreprises qui sont soumises à des coûts de déménagement différenciés, nous mettons en évidence un effet notable des coûts associés au changement de la taille des locaux sur la dynamique de l'emploi. / This thesis studies channels through which corporate real-estate affects investment, employment and mobility of Non-Financial Corporations (NFCs). Real-estate assets account for a sizable share of firms' asset value and premises are often one of the main expenditure items of NFCs. Real-estate prices hence have a bearing on the value of firms' pledgeable assets and on the cost of inputs. In a frictional credit market, the firms' borrowing capacity can be enhanced by an increase in asset's value. The first two chapters of this thesis study this collateral channel and its effects on investment and employment. The first chapter proposes a dynamic setting with a focus on labor market variables whereas the second explores heterogeneous effects across firms, based on micro-data. The last chapter examines the consequences of the peculiarities of real-estate adjustment costs. Studying the relocation behaviour of firms facing varying moving costs, we document important effects of the costs associated with a change in the size of the premises on the employment dynamics.
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Four Essays on Banks, Firms and Real Effects of Bank LendingBednarek, Peter 26 August 2022 (has links)
This dissertation collects four essays on banks, firms and real effects of bank lending. Owing to the appliance of different econometric methods on several datasets, insights in the behav-ior of and the impacts from financial markets and market participants are generated.
In the first chapter, our results uncover a so far undocumented ability of the interbank market to distinguish between banks of different quality in times of aggregate distress. We show empirical evidence that during the 2007 financial crisis the inability of some banks to roll over their interbank debt was not due to a failure of the interbank market per se but rather to bank-specific shocks affecting banks’ capital, liquidity and credit quality as well as revised bank-level risk perceptions. Relationship banking is not capable of containing these frictions, as hard information seems to dominate soft information. In detail, we explore determinants of the formation and resilience of interbank lending relationships by analyzing an extensive da-taset comprising over 1.9 million interbank relationships of more than 3,500 German banks between 2000 and 2012.
The second chapter examines the relationship between central bank funding and credit risk-taking. Employing bank-firm-level data from the German credit registry during 2009:Q1-2014:Q4, we find that banks borrowing from the central bank rebalance their portfolios to-wards ex-ante riskier firms. We further establish that this effect is driven by the ECB’s maturi-ty extensions and that the risk-taking sensitivity of banks borrowing from the ECB is inde-pendent of idiosyncratic bank characteristics. Finally, we show that these shifts in bank lend-ing are associated with an increase in firm-level investment and employment, but also with a deterioration of bank balance sheet quality in the following year.
Once we analyze the relationship of banks as lenders vis-à-vis banks as borrowers and banks as lenders vis-à-vis non-financial companies as borrowers, we enlarge the understand-ing of non-financial companies not only in terms of being simply borrowers, respectively sub-jects exhibiting of credit risks. Instead, we try to understand the inner working of those com-panies more generally and analyze their quality not only in terms of a bank’s risk assessment but also in terms of the overall market assessment. However, this in turn can generate infor-mation useable to assess the quality of a bank’s credit portfolio in dimensions that so far are not taken into account by the current regulatory framework. Moreover, a better understanding of banks and non-banks beyond the standard lens of the banking and corporate finance litera-ture might promote new scopes for future research connecting those discrete subjects. In this regard, the third chapter analyzes the dependence of price reactions to corporate insider trad-ing on several measures of corporate governance quality. Our results strongly support the view that first, higher corporate governance levels seem to prevent or discourage insiders from engaging in insider trading as means of opportunistic rent extraction. Second, results confirm the notion of buy and sell trades not being just two sides of the same coin. That is, a higher level of corporate governance leads to a better pre-event information environment which results in less positive abnormal returns after insider buy trades as the incremental posi-tive information revealed by the trade is smaller. In contrast, sell trades in firms with better corporate governance are perceived to convey more valuable and most importantly negative information to the capital market so that prices adjust more for companies with better govern-ance schemes. Third, we show that institutional ownership even on an aggregate level is a sufficient measure to proxy a company’s corporate governance level. Hence, as information on companies’ bylaws and on investors’ investment dedication and type for example are scarce, respectively associated with higher costs because one has to gather that information one can refrain from that and instead proxy the governance level with the aggregate measure of institutional ownership. The latter result is important for carrying out future analyses merg-ing and extending the findings of the first two chapters.
Last, the fourth chapter abstracts from borrowers as subjects of credit risk, as well, and most importantly extends the analysis of banks, firms and their interactions effecting each other by a macroeconomic perspective of the real effects of bank lending. That is, as capital flows and real estate are pro-cyclical, and real estate has a substantial weight in economies’ income and wealth Chapter 4 studies the role of real estate markets in the transmission of bank flow shocks to output growth across German cities. In this regard, real sector firms play a central role in the transmission mechanism we uncover. More specifically, the empirical analysis relies on a new and unique matched data set at the city level and the bank-firm level. To measure bank flow shocks, we show that changes in sovereign spreads of Southern Eu-ropean countries (the so-called PIGS spread) can predict German cross-border bank flows. To achieve identification by geographic variation, in addition to a traditional supply-side varia-ble, we use a novel instrument that exploits a policy assigning refugee immigrants to munici-palities on an exogenous basis. We find that output growth responds more to bank flow shocks in cities that are more exposed to tightness in local real estate markets. We estimate that, during the 2009-2014 period, for every 100-basis point increase in the PIGS spread, the most exposed cities grow 15-2 basis points more than the least exposed ones. Moreover, the differential response of commercial property prices can explain most of this growth differen-tial. When we unpack the transmission mechanism by using matched bank-firm-level data on credit, employment, capital expenditure and TFP, we find that firm real estate collateral as measured by tangible fixed assets plays a critical role. In particular, bank flow shocks in-crease the credit supply to firms and sectors with more real estate collateral. Higher credit supply then leads firms to hire and invest more, without evidence of capital misallocation.
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