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The Financial Crisis, Bank Lending and UK Productivity: Sectoral and Firm-Level Evidence

Published online by Cambridge University Press:  01 January 2020

Rebecca Riley ,
Chiara Rosazza-Bondibene  and
Garry Young
Rebecca Riley*
Affiliation:
National Institute of Economic and Social Research and Centre for Macroeconomics
Chiara Rosazza-Bondibene
Affiliation:
National Institute of Economic and Social Research and Centre for Macroeconomics
Garry Young*
Affiliation:
Bank of England, NIESR and Centre for Macroeconomics
*
E-mail: r.riley@niesr.ac.uk
E-mail: Garry.Young@bankofengland.co.uk
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Abstract

This paper assesses the evidence and investigates some of the mechanisms by which the most recent banking sector crisis might have affected the supply side of the UK economy. We find clear evidence that the banking sector crisis affected credit supply to businesses and caused bank lending to decline. But we do not find much evidence of the heterogeneity in performance between different industrial sectors that would have been expected if banking sector impairment had been the key factor holding back productivity growth. Consistent with this we do not find strong evidence that a lack of reallocation of resources across businesses has been a substantial drag on productivity growth.

Keywords

creditproductivityrecessionB22D24E34G21
Type
Research Articles
Information
National Institute Economic Review , Volume 228 , May 2014 , pp. R17 - R34
Copyright
Copyright © 2014 National Institute of Economic and Social Research

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Footnotes

The financial support of the Economic and Social Research Council is gratefully acknowledged (Grant: ES/K00378X/1). We are also grateful to Nick Oulton, Martin Weale and participants at a seminar at Glasgow University for comments on an earlier version of this paper. The views expressed in this paper are those of the authors, and do not necessarily reflect those of the Bank of England or the Monetary/Financial Policy Committee. This work contains statistical data which is Crown Copyright; it has been made available by the Office for National Statistics (ONS) through the Secure Data Service (SDS) and has been used by permission. Neither the ONS nor SDS bear any responsibility for the analysis or interpretation of the data reported here. This work uses research datasets which may not exactly reproduce National Statistics aggregates.

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