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Papers by Pierluigi Murro

Research paper thumbnail of Growing through Spinoffs. Corporate Governance, Entry, and Innovation

Research paper thumbnail of Banking development, socioeconomic structure and income inequality

Journal of Economic Behavior & Organization

Research paper thumbnail of Countries lending infrastructure and capital structure determination: The case of European SMEs

Journal of Corporate Finance, 2016

Research paper thumbnail of Bank-firm relations and the role of Mutual Guarantee Institutions during the crisis

Research paper thumbnail of Financial Constraints, Firms’ Supply Chains, and Internationalization

Journal of the European Economic Association

Research paper thumbnail of Bank Lending Technologies and SME Credit Rationing in Europe in the 2009 Crisis

SSRN Electronic Journal, 2000

The first wave of the global financial crisis – emanating from the US subprime debacle and the ba... more The first wave of the global financial crisis – emanating from the US subprime debacle and the bankruptcy of Lehman – hit Europe in the last part of 2008 and through 2009. With banks in a tailspin, credit rationing intensified – as measured in various different ways – particularly for the small and medium sized enterprises (SMEs). The extent of such retrenchment in the supply of credit could reflect not only the worsened general condition of the European banks but also vary at the micro level depending on the lending technologies being used in the SME-main bank rapport. Using the Efige database, we examine SME credit rationing in seven EU countries (Austria, France, Germany, Hungary, Italy, Spain and the UK) and find that differences in the lending technologies and in the status of the firm-main bank relationship contributed to the phenomenon. Specifically, the use of transactional (relational) lending technologies worsened credit rationing throughout the entire sample (in no specification). Furthermore, the production of soft information proved to lower the probability of credit rationing only when associated with a relationship lending technology. Our findings have a bearing not only for a better understanding of the historical economic dynamics in 2009 but offer potential suggestions in view of the following second wave of the instability – centered around the sovereign EU crisis – as well as on the prospect for the Eurozone Banking Union. JEL classification codes: G21, G30, O16. Keywords: Lending technologies, Bank–firm relationship, Credit rationing, Global financial crisis.

Research paper thumbnail of Reti D’Impresa, Performance E Assetti Banca-Impresa

SSRN Electronic Journal, 2000

Research paper thumbnail of Bank Lending Technologies and the Great Trade Collapse: Evidence from EU Micro-Data

SSRN Electronic Journal, 2000

Research paper thumbnail of What’s Special About Banking in Italy? Lending Technologies, Complementarity, and Impact of Soft Information

SSRN Electronic Journal, 2000

Research paper thumbnail of Do Firm-Bank "Odd Couples" Exacerbate Credit Rationing

This paper tests the impact of an imperfect firm-bank type match on firms' financial constraints ... more This paper tests the impact of an imperfect firm-bank type match on firms' financial constraints using a dataset of about 4,500 Italian manufacturing firms. Considering an optimal match of opaque (transparent) borrowing firms with relational (transactional) lending main banks, the possibility arises of firm-bank "odd couples" where opaque firms end up matched with transactional main banks. We show that the probability of credit rationing increases when the mismatch between firms and banks widens. Our conjecture
is that "odd couples" emerge either because of organizational changes in the credit market or since firms observe only imperfectly banks' lending technology.

Research paper thumbnail of Ownership structure, governance, and innovation

This paper tests the impact of firms’ ownership structure on firms’ innovation decisions using a ri... more This paper tests the impact of firms’ ownership structure on firms’ innovation decisions using a rich dataset of about 20,000 Italian manufacturers. After accounting for the endogeneity of the ownership structure, we find that ownership concentration negatively affects the probability of innovation, especially by reducing firms’ R&D effort. The results also suggest that risk aversion induced by lack of financial or industrial diversification is a source of large shareholders’ reluctance to innovate. Moreover, conflicts of interest between large and minority shareholders appear to reinforce the negative effect of ownership concentration on innovation. Once we distinguish across types of shareholders, we uncover some evidence that families support innovation more than financial institutions, but that the benefits of financial institutions for technological change increase with their equity stakes. Collectively, the findings provide support to the view of recent literature that the agency problems that affect firms in continental Europe markedly differ from those in the
United States, not only in static but also in technologically dynamic environments.

Research paper thumbnail of Family Firms, Corporate Governance, and Export

This paper tests the impact of family ownership on firms’ export decisions using a data set of 20... more This paper tests the impact of family ownership on firms’ export decisions using a data set of 20,000 Italian manufacturers. We find that family ownership increases the probability that firms export, although the effect weakens as ownership concentration rises. The benefit of family owners is especially pronounced when they retain control rights (ownership is aligned with control) and seek the support of external managers (ownership is partially separated from management). The results suggest that families better internalize the long-run benefits of internationalization, but that their limited competencies attenuate this benefit in high-tech industries and in remote and unfamiliar export markets.

Research paper thumbnail of SME Financing and the Choice of Lending Technology in Italy: Complementarity or Substitutability?

This paper investigates SME financing in Italy. The literature distinguishes between two main dif... more This paper investigates SME financing in Italy. The literature distinguishes between two main different lending technologies (LTs) for SMEs: transactional and relationship LTs. We find that banks lend to SMEs by using both LTs together, independently of the size and proximity of borrowers. Moreover, we show that the use of soft information decreases the probability of firms being credit rationed. Finally, we find that more soft information is produced when the bank uses relationship LT as primary technology individually or coupled with transactional LT. Our results support the view that LTs can be complementary, but reject the hypothesis that substitutability among LTs is somehow possible for outsiders by means of hardening of soft information.

Research paper thumbnail of Bank support and export: evidence from small Italian firms

Small Business Economics, 2013

The ability of a country and its businesses to grow is tightly related to the possibility of expo... more The ability of a country and its businesses to grow is tightly related to the possibility of exporting and penetrating into foreign markets. The aim of this article is to study whether bank support can help small businesses (SBs) exporting at the extensive as well as the intensive margin. We address this issue by using a large database on small Italian firms. We provide an empirical analysis of the role of bank support in affecting the firms’ export decisions. Our results show that among the exporting SBs those using bank services to support their exports have a higher probability of being better placed in both the intensive and the extensive margin. Moreover, these positive impacts on export are statistically significant only when the main bank of the firm is an internationalized bank. These results have relevant policy implications as well as consequences for the business models of internationalized banks.

Research paper thumbnail of Bank–firm relations and the role of Mutual Guarantee Institutions at the peak of the crisis

Journal of Financial Stability, 2013

We examine the role played by Mutual Guarantee Institutions (MGIs) in the lending policies undert... more We examine the role played by Mutual Guarantee Institutions (MGIs) in the lending policies undertaken by banks at the peak of the Great Crisis of 2007–2009. We address this issue by using a large database on Italian firms built from the credit files of UniCredit banking Group and focusing on small business. We provide an empirical analysis of the determinants of the probability that a borrowing firm will suffer financial tension and obtain two main innovative findings. First, we find that small firms supported by MGIs less likely experienced financial tensions even at that time of utmost financial stress. Second, our empirical evidence shows that MGIs played a signaling role beyond the simple provision of collateral. This latter finding suggests that the information provided by MGIs turned out to be key for bank–firm relations as scoring and rating systems – being typically based on pro-cyclical indicators – had become less informative during the crisis.

Research paper thumbnail of The Determinants of Innovation: what is the Role of Risk?

The Manchester School

Because of its importance in explaining growth, the topic of innovation has received a huge atten... more Because of its importance in explaining growth, the topic of innovation has received a huge attention in the economic literature. The present study aims at contributing to analyse the determinants of innovation, with a special focus on firm risk. Employing a rich sample of Italian manufacturing firms, we tested for the impact on innovation of the riskiness of the firm, as proxied by the probability of default. We found that riskiness of enterprise reduces the tendency to innovate for the firms. The main channel through which firm risk affects innovation capability appears to be that of innovation financing.

Research paper thumbnail of Local banking development and income distribution across Italian provinces

What are the effects of local credit institutions on the distribution of income? Why should local... more What are the effects of local credit institutions on the distribution of income? Why should local banking development matter for the level of inequality? We focus on how different dimensions of banking development and other characteristics of 103 provinces in Italy affect the level of inequality. Using panel estimation and data over the period 2006-2010, we find that local banking development has a significant negative effect on the Gini coefficient and other measures of inequality, i.e. higher banking development is associated with lower inequality. When considering Italian macro-areas sub-samples (North, Center, South), the result is significant only for the North; thus suggesting the existence of a nonlinear relationship between financial development and income inequality, depending on the level of development.

Research paper thumbnail of Public Funding for Basic Research in an Endogenous Growth Model

Rivista di Politica Economica, 2007

The paper deals with the effects of government policy promoting basic research as an incentive to... more The paper deals with the effects of government policy promoting basic research as an incentive to economic growth. Government is included into a Schumpeterian endogenous growth model, in which, thanks to the income proceeding from proportional taxation of monopolistic enterprises profits, it is enabled to carry out basic research activities which match applied research carried out by private enterprises. The results obtained show how it is possible that government determine a taxation level able to optimize economic growth. The effectiveness will be determined by the market. In particular, high competition levels make government policy less effective.

Research paper thumbnail of Soft information and loan supply crisis. Evidence from the credit files of a large bank

Rivista Bancaria, 2011

Using a large database built from the credit files of UniCredit we focus on loans to small busine... more Using a large database built from the credit files of UniCredit we focus on loans to small businesses at the peak of the crisis. We study the determinants of the worsening of financial tension up to March 2009 for those customers experiencing (or close to) financial tension already at the end of December 2008. We find that, controlling for internal ratings, financial tension less likely worsened for the customers enjoying a longer-term relationship. This evidence suggests that during the crisis this large bank used soft information to shift its loan supply toward borrowers with lower ex ante asymmetries of information.

Research paper thumbnail of Lending Technologies in Italy: an Example of Hardening of Soft Information

Rivista Bancaria, 2010

We study the firm-main bank relationship in a large sample of Italy’s manufacturing enterprises. ... more We study the firm-main bank relationship in a large sample of Italy’s manufacturing enterprises. Our results show that the same firm tends to receive credit via different lending technologies. This complementarity across technologies may have an information basis, because the use of soft information is crucial for each lending technology. This supports the hardening-of-soft-information view, whereby also transactional lenders might somehow use difficult to codify qualitative information – traditionally believed a prerogative of relational banks – on borrowing enterprises.

Research paper thumbnail of Growing through Spinoffs. Corporate Governance, Entry, and Innovation

Research paper thumbnail of Banking development, socioeconomic structure and income inequality

Journal of Economic Behavior & Organization

Research paper thumbnail of Countries lending infrastructure and capital structure determination: The case of European SMEs

Journal of Corporate Finance, 2016

Research paper thumbnail of Bank-firm relations and the role of Mutual Guarantee Institutions during the crisis

Research paper thumbnail of Financial Constraints, Firms’ Supply Chains, and Internationalization

Journal of the European Economic Association

Research paper thumbnail of Bank Lending Technologies and SME Credit Rationing in Europe in the 2009 Crisis

SSRN Electronic Journal, 2000

The first wave of the global financial crisis – emanating from the US subprime debacle and the ba... more The first wave of the global financial crisis – emanating from the US subprime debacle and the bankruptcy of Lehman – hit Europe in the last part of 2008 and through 2009. With banks in a tailspin, credit rationing intensified – as measured in various different ways – particularly for the small and medium sized enterprises (SMEs). The extent of such retrenchment in the supply of credit could reflect not only the worsened general condition of the European banks but also vary at the micro level depending on the lending technologies being used in the SME-main bank rapport. Using the Efige database, we examine SME credit rationing in seven EU countries (Austria, France, Germany, Hungary, Italy, Spain and the UK) and find that differences in the lending technologies and in the status of the firm-main bank relationship contributed to the phenomenon. Specifically, the use of transactional (relational) lending technologies worsened credit rationing throughout the entire sample (in no specification). Furthermore, the production of soft information proved to lower the probability of credit rationing only when associated with a relationship lending technology. Our findings have a bearing not only for a better understanding of the historical economic dynamics in 2009 but offer potential suggestions in view of the following second wave of the instability – centered around the sovereign EU crisis – as well as on the prospect for the Eurozone Banking Union. JEL classification codes: G21, G30, O16. Keywords: Lending technologies, Bank–firm relationship, Credit rationing, Global financial crisis.

Research paper thumbnail of Reti D’Impresa, Performance E Assetti Banca-Impresa

SSRN Electronic Journal, 2000

Research paper thumbnail of Bank Lending Technologies and the Great Trade Collapse: Evidence from EU Micro-Data

SSRN Electronic Journal, 2000

Research paper thumbnail of What’s Special About Banking in Italy? Lending Technologies, Complementarity, and Impact of Soft Information

SSRN Electronic Journal, 2000

Research paper thumbnail of Do Firm-Bank "Odd Couples" Exacerbate Credit Rationing

This paper tests the impact of an imperfect firm-bank type match on firms' financial constraints ... more This paper tests the impact of an imperfect firm-bank type match on firms' financial constraints using a dataset of about 4,500 Italian manufacturing firms. Considering an optimal match of opaque (transparent) borrowing firms with relational (transactional) lending main banks, the possibility arises of firm-bank "odd couples" where opaque firms end up matched with transactional main banks. We show that the probability of credit rationing increases when the mismatch between firms and banks widens. Our conjecture
is that "odd couples" emerge either because of organizational changes in the credit market or since firms observe only imperfectly banks' lending technology.

Research paper thumbnail of Ownership structure, governance, and innovation

This paper tests the impact of firms’ ownership structure on firms’ innovation decisions using a ri... more This paper tests the impact of firms’ ownership structure on firms’ innovation decisions using a rich dataset of about 20,000 Italian manufacturers. After accounting for the endogeneity of the ownership structure, we find that ownership concentration negatively affects the probability of innovation, especially by reducing firms’ R&D effort. The results also suggest that risk aversion induced by lack of financial or industrial diversification is a source of large shareholders’ reluctance to innovate. Moreover, conflicts of interest between large and minority shareholders appear to reinforce the negative effect of ownership concentration on innovation. Once we distinguish across types of shareholders, we uncover some evidence that families support innovation more than financial institutions, but that the benefits of financial institutions for technological change increase with their equity stakes. Collectively, the findings provide support to the view of recent literature that the agency problems that affect firms in continental Europe markedly differ from those in the
United States, not only in static but also in technologically dynamic environments.

Research paper thumbnail of Family Firms, Corporate Governance, and Export

This paper tests the impact of family ownership on firms’ export decisions using a data set of 20... more This paper tests the impact of family ownership on firms’ export decisions using a data set of 20,000 Italian manufacturers. We find that family ownership increases the probability that firms export, although the effect weakens as ownership concentration rises. The benefit of family owners is especially pronounced when they retain control rights (ownership is aligned with control) and seek the support of external managers (ownership is partially separated from management). The results suggest that families better internalize the long-run benefits of internationalization, but that their limited competencies attenuate this benefit in high-tech industries and in remote and unfamiliar export markets.

Research paper thumbnail of SME Financing and the Choice of Lending Technology in Italy: Complementarity or Substitutability?

This paper investigates SME financing in Italy. The literature distinguishes between two main dif... more This paper investigates SME financing in Italy. The literature distinguishes between two main different lending technologies (LTs) for SMEs: transactional and relationship LTs. We find that banks lend to SMEs by using both LTs together, independently of the size and proximity of borrowers. Moreover, we show that the use of soft information decreases the probability of firms being credit rationed. Finally, we find that more soft information is produced when the bank uses relationship LT as primary technology individually or coupled with transactional LT. Our results support the view that LTs can be complementary, but reject the hypothesis that substitutability among LTs is somehow possible for outsiders by means of hardening of soft information.

Research paper thumbnail of Bank support and export: evidence from small Italian firms

Small Business Economics, 2013

The ability of a country and its businesses to grow is tightly related to the possibility of expo... more The ability of a country and its businesses to grow is tightly related to the possibility of exporting and penetrating into foreign markets. The aim of this article is to study whether bank support can help small businesses (SBs) exporting at the extensive as well as the intensive margin. We address this issue by using a large database on small Italian firms. We provide an empirical analysis of the role of bank support in affecting the firms’ export decisions. Our results show that among the exporting SBs those using bank services to support their exports have a higher probability of being better placed in both the intensive and the extensive margin. Moreover, these positive impacts on export are statistically significant only when the main bank of the firm is an internationalized bank. These results have relevant policy implications as well as consequences for the business models of internationalized banks.

Research paper thumbnail of Bank–firm relations and the role of Mutual Guarantee Institutions at the peak of the crisis

Journal of Financial Stability, 2013

We examine the role played by Mutual Guarantee Institutions (MGIs) in the lending policies undert... more We examine the role played by Mutual Guarantee Institutions (MGIs) in the lending policies undertaken by banks at the peak of the Great Crisis of 2007–2009. We address this issue by using a large database on Italian firms built from the credit files of UniCredit banking Group and focusing on small business. We provide an empirical analysis of the determinants of the probability that a borrowing firm will suffer financial tension and obtain two main innovative findings. First, we find that small firms supported by MGIs less likely experienced financial tensions even at that time of utmost financial stress. Second, our empirical evidence shows that MGIs played a signaling role beyond the simple provision of collateral. This latter finding suggests that the information provided by MGIs turned out to be key for bank–firm relations as scoring and rating systems – being typically based on pro-cyclical indicators – had become less informative during the crisis.

Research paper thumbnail of The Determinants of Innovation: what is the Role of Risk?

The Manchester School

Because of its importance in explaining growth, the topic of innovation has received a huge atten... more Because of its importance in explaining growth, the topic of innovation has received a huge attention in the economic literature. The present study aims at contributing to analyse the determinants of innovation, with a special focus on firm risk. Employing a rich sample of Italian manufacturing firms, we tested for the impact on innovation of the riskiness of the firm, as proxied by the probability of default. We found that riskiness of enterprise reduces the tendency to innovate for the firms. The main channel through which firm risk affects innovation capability appears to be that of innovation financing.

Research paper thumbnail of Local banking development and income distribution across Italian provinces

What are the effects of local credit institutions on the distribution of income? Why should local... more What are the effects of local credit institutions on the distribution of income? Why should local banking development matter for the level of inequality? We focus on how different dimensions of banking development and other characteristics of 103 provinces in Italy affect the level of inequality. Using panel estimation and data over the period 2006-2010, we find that local banking development has a significant negative effect on the Gini coefficient and other measures of inequality, i.e. higher banking development is associated with lower inequality. When considering Italian macro-areas sub-samples (North, Center, South), the result is significant only for the North; thus suggesting the existence of a nonlinear relationship between financial development and income inequality, depending on the level of development.

Research paper thumbnail of Public Funding for Basic Research in an Endogenous Growth Model

Rivista di Politica Economica, 2007

The paper deals with the effects of government policy promoting basic research as an incentive to... more The paper deals with the effects of government policy promoting basic research as an incentive to economic growth. Government is included into a Schumpeterian endogenous growth model, in which, thanks to the income proceeding from proportional taxation of monopolistic enterprises profits, it is enabled to carry out basic research activities which match applied research carried out by private enterprises. The results obtained show how it is possible that government determine a taxation level able to optimize economic growth. The effectiveness will be determined by the market. In particular, high competition levels make government policy less effective.

Research paper thumbnail of Soft information and loan supply crisis. Evidence from the credit files of a large bank

Rivista Bancaria, 2011

Using a large database built from the credit files of UniCredit we focus on loans to small busine... more Using a large database built from the credit files of UniCredit we focus on loans to small businesses at the peak of the crisis. We study the determinants of the worsening of financial tension up to March 2009 for those customers experiencing (or close to) financial tension already at the end of December 2008. We find that, controlling for internal ratings, financial tension less likely worsened for the customers enjoying a longer-term relationship. This evidence suggests that during the crisis this large bank used soft information to shift its loan supply toward borrowers with lower ex ante asymmetries of information.

Research paper thumbnail of Lending Technologies in Italy: an Example of Hardening of Soft Information

Rivista Bancaria, 2010

We study the firm-main bank relationship in a large sample of Italy’s manufacturing enterprises. ... more We study the firm-main bank relationship in a large sample of Italy’s manufacturing enterprises. Our results show that the same firm tends to receive credit via different lending technologies. This complementarity across technologies may have an information basis, because the use of soft information is crucial for each lending technology. This supports the hardening-of-soft-information view, whereby also transactional lenders might somehow use difficult to codify qualitative information – traditionally believed a prerogative of relational banks – on borrowing enterprises.