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on Business Economics |
| By: | Yusuf Emre Akgündüz (Yusuf Emre Akgündüz); Yusuf Kenan Bağır (Yusuf Kenan Bağır); Seyit Mümin Cılasun (Seyit Mümin Cılasun); Murat Güray Kırdar (Murat Güray Kırdar) |
| Abstract: | This study combines an administrative dataset of the full population of Turkish firms and the setting of the sudden mass migration of Syrian refugees to Turkey to identify the effect of migrants on firm performance and market structure. We find that economic activity increases in hosting regions, but negative implications exist for long-term productivity. As a result of the migrant shock, exiting firms expand and new firms are established; however, the resulting market structure shows less concentration. Quantitatively, a 10 percentage-point rise in the migrant-to-native ratio increases firm sales by 3.8% and the number of active firms by 5.8%, but reduces firms’ average market share by 4.1%. We further document an increase in the export volume and variety of exported products to the Middle East and North Africa (MENA) region. In addition, a decline in export prices is observed, implying a rise in the competitiveness of exporting firms. We also uncover evidence for an effect of migrants’ skills and networks on exports, as the export value and variety of products to the MENA region increase more than those to the EU region while the prices of products exported to the two regions show similar changes. |
| Keywords: | refugees, firm performance, market structure, sales, informality, exports, migrant business networks. |
| JEL: | J15 J61 F16 L11 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:2203&r= |
| By: | Julian di Giovanni; Manuel García-Santana; Priit Jeenas; Enrique Moral-Benito; Josep Pijoan-Mas |
| Abstract: | We provide a framework to study how different allocation systems of public procurement contracts affect firm dynamics and long-run macroeconomic outcomes. We start by using a newly created panel dataset of administrative data that merges Spanish credit register loan data, quasicensus firm-level data, and public procurement projects to study firm selection into procurement and the effects of procurement on credit growth and firm growth. We show evidence consistent with the hypotheses that there is selection of large firms into procurement, that procurement contracts provide useful collateral for firms -more so than sales to the private sector- and that procurement contracts facilitate firm growth beyond the contract duration. We next build a model of firm dynamics with both asset-based and earnings-based borrowing constraints and a government that buys goods and services from private sector firms. We use the calibrated model to quantify the long-run macroeconomic consequences of alternative procurement allocation systems. We find that granting procurement contracts to small firms, either by directly targeting them or by slicing large contracts into smaller ones, helps these firms grow and overcome financial constraints in the long run. However, we also find that reducing the average size of contracts -or making it less likely for large firms to access them- removes saving incentives for large firms, whose negative effects on capital accumulation can overcome the expansionary consequences for small firms and hence generate a drop in aggregate output. |
| Keywords: | Government procurement, financial frictions, capital accumulation, aggregate productivity |
| JEL: | E22 E23 E62 G32 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1821&r= |
| By: | Smirnov, Vladimir; Waity, Andrew |
| Abstract: | We outline the conditions for efficient entry order and clustering in a triopoly preemption game in which firms differ in their sunk costs of entry. The critical factor turns out to be how symmetric the potential entrants are. If the cost asymmetry between the firms is sufficiently large, entry is always in the efficient order. On the other hand, if firms are relatively symmetric, entry order can be inefficient in that the firm with the second-lowest entry cost enters first. Furthermore, if there is any difference in entry costs between the two most efficient firms, there is never clustering (which is when firms enter the market at the same time). Lastly, in contrast to the case with relatively symmetric firms, when the cost asymmetry between firms is large, the leader's entry time in the triopoly is always earlier than it is in a duopoly. |
| Keywords: | timing games; asymmetric firms; clustering; inefficient entry |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:syd:wpaper:2021-11&r= |
| By: | Qing Hu (Faculty of Economics, Kushiro Public University of Economics / Research Fellow, Graduate School of Economics, Kobe University); Tomomichi Mizuno (Graduate School of Economics, Kobe University) |
| Abstract: | We consider a vertically related market with an upstream firm engaging in cost-reducing investment and n downstream firms competing on quantity. We analyze the capacity choice by downstream firms and find that over-capacity occurs in equilibrium if the number of downstream firms is large or the upstream investment is efficient. |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:koe:wpaper:2202&r= |
| By: | Trang T. Hoang |
| Abstract: | This paper studies an import model that incorporates both static crosscountry interdependence and dynamic dependence in firm-level decisions. I find that the benefit of sourcing from one country increases as a firm imports from more countries. Furthermore, using a partial identification approach under the revealed preferences assumption, I provide evidence for the sunk costs of importing, which make establishing relationships with new sellers costlier than maintaining existing ones. The coexistence of cross-country interdependence and sunk costs implies that temporary trade policy changes can have long-lasting effects on both the targeted and non-targeted markets through firm-level decisions. |
| Keywords: | Intermediate goods; Imports; Sunk costs; Exit and entry; Interdependence; Partial identification |
| JEL: | F10 L20 |
| Date: | 2022–02–16 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1337&r= |
| By: | Ferreira, Miguel A.; Eça, Afonso; Prado, Melissa Porras; Rizzo, A. Emanuele |
| Abstract: | We show that FinTech lending affects credit markets and real economic activity using a unique data set of a Peer-to-Business platform for which we have the universe of loan applications. We find that FinTech serves high quality and creditworthy small businesses who already have access to bank credit. Firms use FinTech to obtain long-term unsecured loans and reduce their exposure to banks with less liquid assets, stable funds, and capital. We find that access to FinTech spurs firm growth, employment and investment relative to firms that get their loan application rejected. In addition, firms with access to FinTech increase leverage and substitute long-term bank debt with FinTech debt. Our findings suggest that FinTech allows firms to preserve financial flexibility, reduce their bank dependence and exposure to banking shocks. JEL Classification: G21, G23, O33 |
| Keywords: | bank relationships, debt structure, FinTech, firm growth, small business lending |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20222639&r= |
| By: | Panagiotis Avramidis; George Pennacchi; Konstantinos Serfes; Kejia Wu |
| Abstract: | This paper analyzes how bank regulation that promotes greater access to credit impacts the financing of targeted small firms. It develops a model where banks compete with trade creditors to fund small firms and applies it to study the effects of the Community Reinvestment Act (CRA). The empirical tests reveal that a CRA-induced increase in bank loans reduces small firms’ use of relatively expensive trade credit. The effect is more profound in low- and medium-income areas where financial constraints are tighter due to low bank competition. The effect is also larger for small firms that operate in trade credit-dependent industries. |
| Keywords: | Competition; Regulation; Trade credit; Small business loans |
| JEL: | G14 G21 L13 L50 L49 |
| Date: | 2022–02–17 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:93724&r= |