Essays on firm performance
Keywords: Economics.

This doctoral thesis is composed of three empirical studies on firm and hospital performance. In the first chapter, joint work with Francesco Manaresi (Bank of Italy), we study the impact of Italian bank credit supply on the total factor productivity (TFP) growth of the borrowing firms. This essay is motivated by an extremely important and puzzling fact: aggregate productivity fell sharply during the Great Recession in most OECD economies and it is still growing at a much slower pace than during the pre-crisis period. Furthermore, the sign of the causal relationship between the availability of external financing and productivity is theoretically and empirically ambiguous. This ambiguity has been an additional trigger of our interest. We focus on Italy because of the availability of detailed loan- and firm-level data on credit, inputs, and output. Thanks to these data, we are in a position to credibly study firm-level financial constraints without limiting our analysis to syndicated loans or public companies. We find that a contraction in credit supply causes a decline in firm total factor productivity growth and harms IT-adoption, innovation, and adoption of superior management practices, while a credit expansion has limited impact. Our estimates imply that a credit crunch will be followed by a productivity slowdown. Quantitatively, the credit contraction between 2007 and 2009 can account for about a quarter of the observed decline in Italy's productivity growth. Estimating sound measures of performance for plants or corporations is relatively ``easy'' since researchers can routinely access large-scale datasets on output or revenue produced. Providing equally meaningful measures of hospital performance (and quality in particular) is significantly more difficult because large-scale datasets containing information of individuals' health are extremely rare. In the second chapter, jointly with Anne-Line Koch Helso (Copenhagen University) and Adelina Yanyue Wang (Stanford University), we address this challenge by proposing and estimating a novel measure of hospital quality. To do so, we access data on labor market outcomes and hospital admissions for the whole Danish population. We study the costs of hospitalizations on patient earnings and labor supply and evaluate the quality of treatment based on its ability to mitigate the labor market consequences of a given illness or disease. We find sizable heterogeneity across hospitals and we argue that this novel measure can be a very useful addition to the toolkit of academics, practitioners, and policy-makers interested in healthcare quality. We also document that the reduction in labor earnings and employment associated with a hospitalization declined over the 2000s. This finding suggests that healthcare has improved over time, although this improvement varies greatly by different medical conditions. The third chapter of this dissertation, like the first one, focuses on the impact of credit availability on firm productivity. Together with Guido Martirena (Stanford University), we study the relationship between the development of the local banking sector in Italian provinces and the aggregate productivity (and allocative efficiency) of the firms headquartered in these provinces.