Capital Inflows, Credit Growth and Skill Allocation

81 Pages Posted: 6 Jun 2017 Last revised: 2 Jun 2020

See all articles by Luciana Barbosa

Luciana Barbosa

Bank of Portugal - Economic Research Department

Andrada Bilan

Swiss Finance Institute; University of Zurich

Claire Celerier

University of Toronto - Rotman School of Management

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Date Written: September 6, 2019

Abstract

We investigate how credit market frictions affect the channeling of capital inflows to firms, and in turn their effects on the allocation of human capital. To do so, we exploit exogenous variations in banks' equity capital in Portugal over the 2002-2007 period, a period of massive capital inflows, coupled with matched bank-firm-employees administrative data. Firms in a relationship with better capitalized banks increase borrowing, employment and skill intensity. Our results suggest a bank balance-sheet channel of capital inflows leading to a reallocation of not only capital, but also labor and skills.

Keywords: Capital Flows, Credit Frictions, Employment, Human Capital, Allocation

JEL Classification: G21, J32, J63

Suggested Citation

Barbosa, Luciana and Bilan, Andrada and Celerier, Claire, Capital Inflows, Credit Growth and Skill Allocation (September 6, 2019). Paris December 2017 Finance Meeting EUROFIDAI - AFFI, Available at SSRN: https://ssrn.com/abstract=2981127 or http://dx.doi.org/10.2139/ssrn.2981127

Luciana Barbosa

Bank of Portugal - Economic Research Department ( email )

R. do Ouro, 27
Lisboa, 1100-150
Portugal

Andrada Bilan (Contact Author)

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

Claire Celerier

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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