Publications - Working Papers IER SAS

We investigate impact of bank branch closure on labour productivity in SME sector in Slovakia over the period 2013-2019. We use staggered difference-in-difference approach with treatment variable identified by the bank branch closure that occurred in a close (15 km radius) vicinity of a firm. The possible selection bias is addressed by the inclusion of the Mills ratio derived from the nonlinear model estimating the probability of a treatment. We report heterogeneous effect of bank branch closures that is dependent on the measure of firm’s creditworthiness approximated by the Altman z-score. In years following the treatment, enterprises with lower z-score experience an increase in labour productivity fuelled by an increase in relative extent of bank financing, and firms with higher z-score report declining labour productivity associated with the decrease in bank financing.