Research

Working papers

"Weaker today, stronger tomorrow: peer learning and firm innovation after the Great Recession" (job market paper)

Abstract:

Can a recession have a positive, long-term impact on firm innovation? A down- turn represents an opportunity for firms to learn from their peers and try to un- derstand the main drivers of resilience. If they deem R&D capital one of them, they may raise innovation in the following years, in order to be better shielded from future crisis. In this paper, I provide evidence of this effect in the aftermath of the Great Recession. I do so by assuming that firms learned from their best peers and by examining the characteristics of these companies. I first look at their level of R&D capital and find that firms with high-R&D best peers raised intangible invest- ment 5 percent more than others after 2008. I then examine the top competitors’ type of R&D capital and show that companies raised innovation only in the case of high-productivity (as opposed to high-product differentiation) best peers. Us- ing alternative tests, I find a positive (negative) relationship between productivity (product differentiation) and company performance during the crisis, which sup- ports the fact that companies learned from their peers and raised innovation only when they deemed it a source of resilience to the downturn. Finally, I examine whether the increase in innovation improved firm resilience and show that it did: companies raised sales growth, profitability and international recognition and were less likely to fail.

"Innovation, Resilience and Employment Growth: Evidence from the U.S. Housing Boom and Burst"

Abstract:

Can an industrial boom stimulate innovation in related industries? And, if that is the case, can innovation increase firm resilience to a subsequent downturn? I answer these questions using the 2000s U.S. housing boom and burst. The boom raised the demand for capital inputs largely used in construction, increasing compe- tition in sectors that provide such inputs and encouraging firms in these industries to innovate: between 2000 and 2005, they increased intangible investment, filed more patents, and hired more skilled human capital than other firms. Innovation provided them an effective shield to the subsequent housing burst: on average, con- struction suppliers were hurt by the drop in demand, but those with a high level of R&D capital managed to maintain their market share. Among the various types of innovation, product differentiation provided the most effective shield, due to both higher market power and the fact that unique products face a global demand. Re- silience of R&D-intensive construction suppliers allowed them to keep hiring during the Great Recession, thus mitigating the 2007-2010 employment drop.

"Entry in Banking Markets” (with Guillaume Vuillemey)

Abstract:

We show that adverse selection is a key determinant of banking market structure. Using data on US bank branches over 1981-2016, we study banks' decisions to expand or contract geographically. First, banks are more likely to expand in counties that are similar, in terms of industry shares, to those in which they already have branches. Second, when contracting, banks are more likely to close or sell branches in similar areas. These results suggest that banks value diversification, but that informational barriers prevent them from achieving optimal scale. These findings have implications for banking competition and the rise of fintechs.