1st Finance and Productivity Conference (FINPRO)

The 1st Finance and Productivity Conference (FIN-PRO) took place on 2 and 3 December 2019 in London. It was jointly organised by CompNet, the European Bank for Reconstruction and Development (EBRD) and the IWH. At first, the focus lay on the connection between entrepreneurship and innovation. The topics encompassed the negative effects of adverse financial shocks on start-ups and the early career choices of elite engineers. Şebnem Kalemli-Özcan gave the first keynote speech, presenting her research agenda on the role of corporate leverage in propagating aggregate boom-bust cycles. For Europe, she finds that corporate debt overhang is important in order to understand the low investment activity. Furthermore, three interesting presentations showed the link between financial frictions and productivity. Among others, Simone Lenzu presented a paper investigating the effect of negative credit supply shocks on firms’ productivity growth. The results suggest that, in the short-run, productivity (purged from price effects) does not move in response to financial shocks, while over a longer time, horizon credit supply shocks have a negative impact on productivity growth, which is driven by a persistent contraction of firms’ investments in innovation and technology adoption. Klaas Mulier presented a novel approach for identifying financial constraints from production data, using evidence from ECB’s SAFE survey, which informs about self-reported financial constraints.