This paper takes advantage of unique survey data of Italian firms to investigate the role played by credit constraints in the transmission of the shocks generated by the COVID-19 outbreak. These data, collected just before and just after the onset of the pandemic, allow us to study how revisions of firms’ expectations and plans are shaped by a survey-based measure of credit constraints that uses information about the outcome of past loan applications. Our results show that the lack of access to credit amplifies the negative effects of the pandemic shock on expected sales, orders and planned employment and investment. Moreover, credit-constrained firms, in their search for liquidity, plan to charge higher prices relative to their unconstrained counterparts.

Speaker bio

Fabio Schiantarelli is currently Professor of Economics in the Economics Department at Boston College, in Boston, Massachusetts. He has taught at Boston University, Essex University, Southampton University, Bocconi University, and at the European University Institute. He has been a consultant for the World Bank and for the Inter American Development Bank on several projects.

Fabio Schiantarelli has written on topics such as adjustment costs, investment and labor demand, the effect of financial constraints, financial shocks, tax policy and product market regulation on investment, the impact of financial reform on allocative efficiency and saving, capital accumulation and growth, innovation and productivity, legal institutions and firms’ loan repayment decisions, the relationship between labor market outcomes, policies and culture, the evolution of culture among immigrants, ancestry composition, diversity and local economic performance, the economic effects of populism, Covid-19, financing constraints and firms’ expectations and plans.

He has published in international journals such as the American Economic Review, the Journal of Finance, the Review of Economics and Statistics, the Economic Journal, The Journal of the European Economic Association, the International Economic Review, the Journal of Econometrics, the Journal of Applied Econometrics, the Journal of Monetary Economics, the Journal of Economic Growth, the Journal of Financial Economics, the Review of Finance, the Journal of Financial Intermediation, the Journal of Public Economics, the European Economic Review, the Journal of Development Economics, Oxford Economic Papers, Oxford Bulletin of Economics and Statistics, and Economica.