Mo.Fi.R. Working Papers (2020)

Mo.Fi.R. Working Papers (>> Mo.Fi.R. website)

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  • Paper nr. 167
Title: The Reallocation Effects of COVID-19: Evidence from Venture Capital Investments around the World
Authors: Andrea Bellucci, Alexander Borisov,  Gianluca Gucciardi, Alberto Zazzaro

We examine possible reallocation effects on venture capital (VC) investment due to the spread of COVID-19 around the globe. Exploiting the staggered nature of the pandemic and transactionlevel data, we empirically document a shift of venture capital towards deals in pandemic-related categories. A difference-in-differences analysis estimates significant increases in invested amount and number of deals in such categories. We further highlight several heterogenous effects related to the experience of VC investors, their organizational form, and country of origin. Our results underscore the link between the spread of the pandemic and the functioning of the VC market around the world.


  • Paper nr. 166
Title: Capital Market Financing and Firm Growth
Authors: Tatiana Didier, Ross Levine, Ruth Llovet Montanes, Sergio L. Schmukler

This paper studies whether there is a connection between finance and growth at the firm level. It employs a new dataset of 150,165 equity and bond issuances around the world, matched with income and balance sheet data for 62,653 listed firms in 65 countries over 1990-2016. Three main patterns emerge from the analyses. First, firms that choose to issue in capital markets use the funds raised to grow by enhancing their productive capabilities, increasing their tangible and intangible capital and the number of employees. Growth accelerates as firms raise funds. Second, the faster growth is more pronounced among firms that are more likely to face tighter financing constraints, namely, small,
young, and high-R&D firms. Third, capital market issuances are associated with faster growth among firms located in countries with more developed capital markets relative to banks. Capital markets are also comparatively effective at allowing financially constrained firms to raise capital.


  • Paper nr. 165
Title: Search for Yield in Large International Corporate Bonds: Investor Behavior and Firm Responses
Authors: Charles W. Calomiris,  Mauricio Larrain, Sergio L. Schmukler, Tomas Williams

Emerging market corporations significantly increased their borrowing in international markets since 2008 through large bond issuances. We document a strong clustering of issuances with face value of exactly US$500 million after 2008. This reflects investor willingness to purchase emerging market bonds included in international bond indexes (requiring a minimum face value of US$500 million). Index-eligible bonds allow investors to hold more liquid securities. Firms face a tradeoff: issuing large, index-eligible bonds allows them to borrow at a lower cost at the expense of hoarding cash. Because of this “size yield discount,” many companies issued index-eligible bonds, increasing cash holdings.


  • Paper nr. 164
Title: Financial inclusion and poverty transitions: an empirical analysis for Italy
Authors: Giulia Bettin, Claudia Pigini, Alberto Zazzaro

We estimate the causal e ect of Financial inclusion on transition probabilities into and out of poverty. By exploiting a longitudinal sample from the Bank of Italy’s Survey on Household Income andWealth between 2002 and 2016, we find that financial inclusion is effective in both reducing the likelihood of falling into poverty and helping poor people to improve economic conditions and get out of their poverty status. According to our baseline estimates, the
access to a deposit account actually reduces the risk of falling below the poverty line by 3 percentage points and increases the chance of exiting poverty by 5 percentage points. The significance and the magnitude of such e ects are confirmed also when considering alternative proxies for financial inclusion (availability of debit/credit/pre-paid cards, use of remote banking services) and are robust to alternative empirical strategies (bivariate model with overidentifying restrictions) and to misspeci cation problems related to omitted factors, such as the level of household indebtedness.

  • Paper nr. 163
Title: Supporting innovative entrepreneurship: an evaluation of the Italian “Start-up Act”
Authors: Francesco Manaresi, Carlo Menon, Pietro Santoleri

The role of innovative start-ups in contributing to aggregate economic dynamism has attracted increased attention in recent years. While this has translated into several public policies explicitly targeting them, there is little evidence on their e ectiveness. This paper provides a comprehensive evaluation of the “Start-up Act”, a policy intervention aimed at supporting innovative start-ups in Italy. We construct a unique database encompassing detailed information on firm balance-sheets, employment, firm demographics, patents and bank-firm relationships for all Italian start-ups. We use conditional difference-in-differences and  instrumental variable strategies to evaluate the impact of the “Start-up Act” on firm performance. Results show that the policy induces a significant increase in several firm outcomes whereas no effect is detected in patenting propensity and survival chances. We also document that the policy alleviates nancial frictions characterizing innovative start-ups through the provision of tax credits for equity and a public guarantee scheme which, respectively, trigger an increase in the probability of receiving VC and accessing bank credit.

  • Paper nr. 162
Title: Financing Firms in Hibernation during the COVID-19 Pandemic
Authors: Tatiana Didier, Federico Huneeus, Mauricio Larrain, Sergio L. Schmukler

The coronavirus (COVID-19) pandemic has halted economic activity worldwide, hurting rms and pushing them toward bankruptcy. This paper provides
a uni ed framework to organize the policy debate related to rm nancing during the downturn, centered along four main points. First, the economic
crisis triggered by the spread of the virus is radically different from past crises, with important consequences for optimal policy responses. Second, to avoid
inefficient bankruptcies and long-term detrimental effects, it is important to preserve rms’ relationships with key stakeholders, like workers, suppliers,
customers, and creditors. Third, rms can bene t from “hibernating,” using the minimum bare cash necessary to withstand the pandemic, while using
credit to remain alive until the crisis subdues. Fourth, the existing legal and regulatory infrastructure is ill-equipped to deal with an exogenous systemic
shock such as this pandemic. Financial sector policies can help increase the provision of credit, while posing difficult choices and trade-offs.

  • Paper nr. 161
Title: Management Innovations in Family Firms after Succession: Evidence from Japanese SMEs
Authors:  Hirofumi Uchida, Kazuo Yamada, Alberto Zazzaro

In this paper, we examine whether family firms are more or less likely to foster management innovation, expanded incumbent business activities, or make advance to new business fields after CEO succession than non-family firms. Using data of 1,149 SMEs (small- and medium-sized enterprises) obtained from a
corporate survey in Japan, we find that the new CEOs of family firms are not systematically less or more innovative than their counterparts in non-family firms. However, we also find that this zero effect of family ownership on innovation likelihood is the result of a negative impact of professional successors and
a positive impact of heir successors. Finally, we show that access to intangible family assets increases the innovativeness of heir successors and decreases that of professional successors.

  • Paper nr. 160
Title: Relationship lending and employment decisions in firms’ bad times
Authors:  Pierluigi Murro, Tommaso Oliviero, Alberto Zazzaro

Using firm-level survey information, we investigate whether relationship lending affects firms’ employment decisions when they experience negative shocks on sales. We find that firms maintaining long-lasting relationships with their main bank show a significantly lower sensitivity of employment growth rate to shocks in sales. This result is robust to measurement issues and to an instrumental variable strategy, and is stronger for young,  small, human-capital-intensive firms. Our findings indicate that relationship lending acts as an insurance for firms’ employees against adverse sales fluctuations, especially for firms whose internal workforce is more valuable and is thus substitutable at larger costs

  • Paper nr. 159
Title: Non disponibile


  • Paper nr. 158
Title:  Aid Effectiveness in Fragile States
Authors:  Francesca G. Caselli, Andrea F. Presbitero

Fragile states are highly dependent on foreign aid and are characterized by several features that impair their economic and social performance. After reviewing the literature on aid effectiveness, the chapter presents several stylized facts on aid flows to  fragile states, and exploits detailed project-level data to provide novel evidence on aid effectiveness in fragile states. Comparing project success rate across fragile and other developing countries confirms that aid given to fragile states is less likely to be effective than elsewhere. Focusing on the conflict dimension of fragility, we can extend our analysis at the subnational level to strengthen the identification of the effect of fragility on project success. Our results indicate that a project implemented in a fragile state is up to 8 percentage points less likely to be successful than a similar project financed in another developing country. Our analysis does not imply that aid to fragile states should be reduced across the board, but points to several factors that could hamper the growth dividend of aid.