Research

Working Papers

"Credit supply and green investments" (with Antonio Accetturo, Michele Cascarano, Giorgia Barboni and Marco Tomasi)

Featured in VoxEU

Slides

Abstract: Does an increase in credit supply affect firms' likelihood to invest in green technologies? To answer this question, we use text algorithms to extract information on green investments from the comments to the financial statements of Italian SMEs between 2015 and  2019. To identify the effect of credit supply, we use all loans disbursed by banks operating in Italy to construct a firm-specific time-varying instrument for credit availability. We find a large positive elasticity of green investments to credit supply. The effect is concentrated among firms with high availability of internal capital and in areas with higher preferences for environmental protection. Subsidies and market competition can spur green investments if combined with environmental awareness.


"Monetary policy bottlenecks" (with Frédéric Boissay and Steven Ongena)

Older working paper versions: BIS Working paper No. 957 (Aug. 21); CEPR Discussion Paper No. DP16465 (Aug. 21) Featured in VoxEU (older version)

Abstract: Analyzing US data on corporate linkages, we investigate the transmission of monetary policy through intermediate goods markets. Our analysis uncovers three key insights. First, contractionary monetary conditions lead to production disruptions in financially constrained firms. Second, these disruptions extend to the suppliers and customers of such firms. Third, disruptions intensify when financially constrained firms purchase or sell specialized goods. These findings suggest that monetary tightening creates bottlenecks in supply chains, compelling firms to curtail production when they cannot substitute their constrained business partners.  "Monetary policy bottlenecks" amplify the impact of monetary policy beyond the standard balance sheet channel of transmission.  


"How does climate change affect firm sales? Identifying supply effects" (with Cláudia Custódio, Miguel Ferreira and Adrian Lam) Slides

  (Previously circulated as "Economic impact of climate change")

  BEST PAPER AWARD, Essex Finance Centre (EFiC) 2021 Conference

Featured in The European

Abstract: We estimate the economic impact of climate change by exploiting variation in local temperature across suppliers of the same client. We find that suppliers experiencing a 1°C increase in average daily temperature decrease their sales by 2%. The effect is more pronounced among suppliers in manufacturing and heat-sensitive industries, which is consistent with lower labor productivity and supply when temperatures are higher. Financially constrained suppliers are more affected due to their lack of financial flexibility to adapt to changes in temperatures. We also find that episodes of extremely hot and cold weather lead to large drops in sales. 


"Banking on Deposit Relationships" (with Jin Cao and Cédric Huylebroek) 

Norges Bank Working Paper 4/2024

Abstract: Theory suggests that by lending to a firm, inside banks gain an informational advantage over non-lender outside banks. This informational gap hinders borrowers from switching lenders due to a winner’s curse faced by competing outside banks, leading to hold-up problems. In this paper, we show that firms can reduce this informational gap by forming deposit relationships with outside banks, thereby attenuating hold-up. Using unique data on the deposit and lending relationships of all firm-bank pairs in Norway, we find that having a deposit relationship with non-lender outside banks significantly increases a firm’s likelihood of switching lenders. Furthermore, firms that have a prior deposit relationship with new lenders obtain significantly better loan conditions upon switching. In line with informational hold-up theory, these effects are driven by reduced information asymmetries, not cross-selling. Our

findings have important implications for open banking and hold-up problems in the loan market.


"Rewiring supply chains through carbon pricing policy" (with Emanuela Benincasa, Olimpia Carradori and Miguel Ferreira) 

(Draft available upon request)

Abstract: Do firms rewire their supply chain networks away from carbon pricing regimes? We study the rewiring of supply chains caused by the introduction of the California cap-and-trade in 2013. We find that suppliers affected by the policy are less likely to continue pre-existing relationships with their customers and to start relationships with new customers. Consistent with a heightened competitive disadvantage faced by firms subject to the cap, the effect is driven by suppliers producing standardized inputs, who, after 2013, also suffer worsened financial performance. Concurrently, customers indirectly exposed to the policy, through supply chain relationships, experience a worsening of their financial performance and an increase in their average supply chain emissions and emission intensity.


"Cultural Bonds" (with Michele Cascarano, Francesco Stradi and Naciye Sekerci)

(Draft available upon request)

Abstract: We use detailed data on security holdings by households of diverse cultural origins to analyze the effects of culture on investments in government bonds. For identification, we exploit the Italian sovereign financial crisis in a region hosting individuals of Italian and Germanic cultural origin. We uncover significant cultural differences in the investment in government bonds following the crisis. Our results suggest that these differences stem from distinct risk perceptions of these bonds, influenced by deep-rooted cultural attitudes towards debt and its excess. These insights enhance our understanding of the impact of culture on financial behavior and provide context to narratives highlighting a North-South divide within the European Union driven by differing views on public debt management.


Permanent working papers

"Lending to small businesses: The value of soft information"

Abstract: We examine whether banks use soft information in their lending decisions. To overcome the problem of soft information measurement, we analyze whether publicly available variables that are correlated with the borrowers' credit quality are more significant in explaining the lending decisions of banks that have no soft information. We find that the power of these variables to predict credit outcomes is lower whenever the bank has access to soft information. The results indicate the importance of soft information in small business lending, and are robust to several measures of soft information availability, and to a potentially endogenous relationship between soft information and credit quality.

 

"Supplier certification and trade credit"

Abstract: We find evidence that input suppliers provide credit quality certification to their borrowers. Banks are more likely to lend to firms that have been granted trade credit by their suppliers and to firms that pay higher proportions of their trade credit debts on time. This ‘certification’ role of trade credit is most apparent when banks are relatively uninformed about their potential creditors, and when firms are relatively more opaque. We address causality using instruments that are motivated by theories and empirical regularities of the corporate use of trade credit. Results are robust to potentially endogenous relationships between the use of trade and bank credit.

publications

"Indirect costs of financial distress" (with Cláudia Custódio and Miguel Ferreira) 

Review of Finance 27:6 (2023), p. 2233–2270  Slides


"Managers’ cultural origin and corporate response to an economic shock" (with Mascia Bedendo and Linus Siming) 

Journal of Corporate Finance 80 (2023), 102412


"The role of culture in firm-bank matching" (with Antonio Accetturo, Giorgia Barboni and Michele Cascarano) 

Journal of Financial Intermediation 53 (2023), 101018


"Cultural preferences and firm financial choices" (with Mascia Bedendo and Linus Siming) 

Journal of Financial and Quantitative Analysis 55:3 (2020), pp. 897-930.


"Firms as liquidity providers: Evidence from the 2007-2008 financial crisis" (with Judit Montoriol-Garriga) 

Journal of Financial Economics 109 (2013), pp. 272-291 

Featured in Nada es Gratis (in Spanish)


"Does asset encumbrance affect bank risk? Evidence from covered bonds" (with Giacomo Nocera and Stefano Gatti)

Journal of Banking and Finance 146 (2023), 106705.


"Trade credit use as firms approach default" (with Judit Montoriol-Garriga) 

Journal of Money, Credit and Banking 52:5 (2020), pp. 1199-1229.


"Financial distress and competitors' investment" 

Journal of Corporate Finance, 51 (2018), pp. 182-209


"Experience and brokerage in asset markets: Evidence from art auctions" (with Brunella Bruno and Giacomo Nocera) 

Financial Management 47 (2018), pp. 833-864


"Contracts and returns in PE investments" (with S. Caselli and F. Ippolito)

 Journal of Financial Intermediation 22 (2013), pp. 201-217.


"Come sarebbe l'Italia con 1,000 imprese quotate?" (with Manuela Geranio) 

Economia & Management 3 (2013), pp. 95-115. 


"Review of Fault Lines,” 

Financial Markets and Portfolio Management 27 (4) (2013); pp. 431-433.


"Trade credit and its role in entrepreneurial finance,” (with Vicente Cuñat). In: Cumming, D. (Ed.), 2012, 

Oxford Handbook of Entrepreneurial Finance, Oxford University Press; New York, pp. 526-557.