, when examining it adoption by firms, ict investments have high returns to scale because of their low marginal costs but higher fixed costs. see lorin m. hitt, d. j. wu, and xiaoge zhou, “ investment in enterprise resource planning : business impact and productivity measures, ” j. of management information systems 19, no. 1 ( 2002 ) : 71 – 98. amatori, f., bugamelli m. and a. colli ( 2011 ), “ italian firms in history : size, technology and entrepreneurship ”, banca d ’ italia economic history working papers, no. 13, october 2011. imf ( 2015 ), “ spain : selected issues ”, imf country report no. 15 / 233. schivardi, f., and torrini, r. ( 2004 ). “ firm size distribution and employment protection legislation in italy. ” banca d ’ italia economic working paper, no. 504, june 2004. garicano l., lelarge c. and j. van reenen ( 2012 ) “ firm size distortions and the productivity distribution : evidence from france. ” nber working papers, no. 18841, march 2012. imf ( 2015 ), “ spain : selected issues ”, imf country report no. 15 / 233. bis central bankers ’ speeches as insolvency law. 15 in keeping with this, other recent evidence suggests that legal reforms such as enhancing the efficiency of civil justice can lead to higher rates of firms ’ market entry and attract greater foreign direct investment. 16 third, by improving the efficiency of financial markets so that resources can be reallocated between growing and shrinking firms. in this context the key structural reform is advancing with the capital markets union project, which should help deepen markets in europe for early stage venture capital, as well creating new opportunities for market financing – such as private placements – for more mature firms. framework conditions matter here as well : a new ecb study finds, for example, that the probability to obtain credit is up to 40 % higher in countries with a better legal system. 17 fourth, by improving human capital, especially in the area of digital skills. after all, if workers lack the skills to operate ict then firms will be less likely to invest in it, and those that do will find it harder to attract qualified workers and grow. in this sense, reducing barriers across - firm reallocation, such as enhancing

##udential policies to be used counter - cyclically, thereby helping contain boom - bust dynamics. second, european banking resolution should provide a framework for harmonised and predictable burden - sharing through the private sector, which is key to create the conditions for deeper retail banking integration, and hence for the financial risk - sharing benefits of monetary union to materialise. what is needed now is for banking union being completed in all the areas that have been identified. the challenge of lifting productivity still, despite the present cyclical recovery and reforms already made, we cannot ignore the fact that the underlying pessimism i alluded to at the start remains. this may be partially lifted as the benefits of those reforms start to appear in headline growth rates. but in my view further reforms will be needed to decisively shift expectations, in particular in the priority area of raising total factor productivity ( tfp ) which is ultimately what drives long - term growth. the difference between the euro area and the us in this regard shows the possibilities we have for improvement. the determinants of tfp growth are complex, but broadly speaking it is a function of withinfirm and across - firm efficiency. the former is linked to investments in human capital, innovation, management quality and technology. the latter relates to the efficiency of labour and capital reallocation. there are many factors that can influence these processes, but given the focus of today ’ s conference i would like to single out one in particular. that is the nexus between firm growth, technology adoption and resource allocation in the euro area and how it affects productivity growth. completing europe ’ s economic and monetary union ”, report by jean - claude juncker in close cooperation with donald tusk, jeroen dijsselbloem, mario draghi and martin schulz, june 2015. bis central bankers ’ speeches many euro area economies are characterised by a high proportion of micro and small firms, especially in comparison with the us. while small firms can add important value to the economy – indeed, young firms create most net new jobs 7 – that value diminishes if they do not grow over time. for example, the average size of a manufacturing sector start - up in the us and italy is roughly the same within its first two years – 5 - 10 employees. after ten years, however, the average us firm has grown to around 75 employees, while the average italian still has below 15 employees. 8 this static pattern of firm growth hinders both the within