Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/310399 
Year of Publication: 
2024
Series/Report no.: 
Working Papers No. 2024-16
Publisher: 
Banco de México, Ciudad de México
Abstract: 
We study the real effects of credit supply shocks during the COVID-19 pandemic in Mexico. To this end, we merge administrative micro-level data on the universe of bank loans to firms with matched employer-employee social security records. For each firm, we measure its exposure to time-varying credit supply shocks. We find that a negative credit shock of one standard deviation would have increased a firm's exit probability by 0.15 percentage points (pp) and decreased its annual employment growth by 1 pp. These effects were most pronounced among unincorporated businesses, small and young firms, and those in non-essential sectors. Negative credit supply shocks led to higher separation rates for workers with low layoff costs, like those with low tenure or temporary contracts.
Subjects: 
Banks
credit supply shocks
employment
JEL: 
D22
E24
E44
E51
G2
Document Type: 
Working Paper
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