A Study of the Effectiveness of Credit Subsidies: Evidence from a Panel of Italian Firms.
Credit subsidies in targeted industrial sectors or geographical areas are a primary mechanism of industrial and redistributive policy throughout the world. Using a unique panel of bank-firm relationships, we study the impact of interest-rate subsidies on the total amount of borrowing and on the aver...
| Main Authors: | , |
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| Format: | Working paper |
| Language: | English |
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Department of Economics (University of Oxford)
2003
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| _version_ | 1826304777144762368 |
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| author | Rapisarda, G Patacchini, E |
| author_facet | Rapisarda, G Patacchini, E |
| author_sort | Rapisarda, G |
| collection | OXFORD |
| description | Credit subsidies in targeted industrial sectors or geographical areas are a primary mechanism of industrial and redistributive policy throughout the world. Using a unique panel of bank-firm relationships, we study the impact of interest-rate subsidies on the total amount of borrowing and on the average cost of borrowing for subsidised firms. Even though they seem to promote the rise of new bank-firm relationships, subsidies have a relatively small effect on the total amount of borrowing when granted to existing clients. We also find evidence of a spillover effect of subsidies on non-subsidised interest rates, which is suggestive of possible rent-seeking activities undertaken by banks and their targeted borrowers. The size of the subsidy, the bank’s local market power, her informational advantage and the lenght of the bank-client relationship are found to be important determinants of the spillover effect. |
| first_indexed | 2024-03-07T06:22:54Z |
| format | Working paper |
| id | oxford-uuid:f3482a0b-adf2-4ca4-8955-09940f1cf83f |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-07T06:22:54Z |
| publishDate | 2003 |
| publisher | Department of Economics (University of Oxford) |
| record_format | dspace |
| spelling | oxford-uuid:f3482a0b-adf2-4ca4-8955-09940f1cf83f2022-03-27T12:10:55ZA Study of the Effectiveness of Credit Subsidies: Evidence from a Panel of Italian Firms.Working paperhttp://purl.org/coar/resource_type/c_8042uuid:f3482a0b-adf2-4ca4-8955-09940f1cf83fEnglishOxford University Research Archive - ValetDepartment of Economics (University of Oxford)2003Rapisarda, GPatacchini, ECredit subsidies in targeted industrial sectors or geographical areas are a primary mechanism of industrial and redistributive policy throughout the world. Using a unique panel of bank-firm relationships, we study the impact of interest-rate subsidies on the total amount of borrowing and on the average cost of borrowing for subsidised firms. Even though they seem to promote the rise of new bank-firm relationships, subsidies have a relatively small effect on the total amount of borrowing when granted to existing clients. We also find evidence of a spillover effect of subsidies on non-subsidised interest rates, which is suggestive of possible rent-seeking activities undertaken by banks and their targeted borrowers. The size of the subsidy, the bank’s local market power, her informational advantage and the lenght of the bank-client relationship are found to be important determinants of the spillover effect. |
| spellingShingle | Rapisarda, G Patacchini, E A Study of the Effectiveness of Credit Subsidies: Evidence from a Panel of Italian Firms. |
| title | A Study of the Effectiveness of Credit Subsidies: Evidence from a Panel of Italian Firms. |
| title_full | A Study of the Effectiveness of Credit Subsidies: Evidence from a Panel of Italian Firms. |
| title_fullStr | A Study of the Effectiveness of Credit Subsidies: Evidence from a Panel of Italian Firms. |
| title_full_unstemmed | A Study of the Effectiveness of Credit Subsidies: Evidence from a Panel of Italian Firms. |
| title_short | A Study of the Effectiveness of Credit Subsidies: Evidence from a Panel of Italian Firms. |
| title_sort | study of the effectiveness of credit subsidies evidence from a panel of italian firms |
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