The Impact of the Financial Crisis on UK Company Performance

UK productivity fell sharply during the recession of 2008-9. It subsequently recovered only sluggishly so that five years after the initial slump output per worker was about 15 per cent below a simple extrapolation of its pre-crisis trend. This contrasts very sharply with the experience of other post-war recessions in the UK. This project investigates the underlying causes of this productivity weakness in the UK, examining in particular the mechanisms by which the banking sector crisis might have affected the supply side of the UK economy, and how it has affected company performance.

Methods

The research is empirical in nature. It involves examining how the stagnation in aggregate productivity relates to the productivity experience of different UK companies. Our main focus is on analysing reasons for productivity weakness directly related to the banking crisis. To this end we first decompose productivity growth into sub-components that are more or less likely to be associated with the banking crisis. We develop from existing data sources measures of the impact of the banking sector crisis on bank credit conditions experienced by different types of UK companies. We then use a quasi-experimental research design to identify the impact of bank credit conditions on a number of company performance measures.

Funder

The study is funded by the Economic and Social Research Council and is being undertaken in collaboration with the Bank of England.

Duration

December 2012 - September 2014

Output

Papers

The Financial Crisis, Bank Lending and UK Productivity: Sectoral and Firm-Level Evidence
Rebecca Riley, Chiara Rosazza Bondibene and Garry Young
National Institute Economic Review, May 2014

Productivity Dynamics in the Great Stagnation: Evidence from British businesses” (also here)
Rebecca Riley, Chiara Rosazza Bondibene and Garry Young
CFM, 30 May 2014

"The UK Productivity Puzzle 2008-2013: Evidence From British Businesses"
Rebecca Riley, Chiara Rosazza Bondibene and Garry Young
NIESR Discussion Paper 450

Presentations

The Impact of the Financial Crisis on UK Company Performance
Rebecca Riley, Chiara Rosazza Bondibene and Garry Young
9 July 2013 FINCRISIS User Group meeting

The Impact of the Financial Crisis on UK Company Performance” (Powerpoint presentation)
Rebecca Riley, Chiara Rosazza Bondibene and Garry Young
11 November 2013 FINCRISIS User Group meeting

"The Impact of the Financial Crisis on UK Company Performance" (Powerpoint presentation)
Rebecca Riley, Chiara Rosazza Bondibene and Garry Young
14 November 2013 University of Glasgow Economics Seminar

Using the ABS for research purposes at NIESR
Rebecca Riley
Presentation to ONS 19 December 2013

Bank Credit Conditions and UK Company Performance
Rebecca Riley, Chiara Rosazza Bondibene and Garry Young
7 April 2014 RES 2014 Annual Conference, Manchester

Productivity Dynamics in the Great Stagnation: Evidence from British Businesses” (Powerpoint presentation)
Rebecca Riley, Chiara Rosazza Bondibene and Garry Young
9 April 2014 RES 2014 Annual Conference, Manchester

The Impact of the Financial Crisis on UK Company Performance
Rebecca Riley, Chiara Rosazza Bondibene and Garry Young
24 June 2014 ESRC Secondary Data Analysis Initiative NIESR, London

Understanding productivity performance in the Great Stagnation: a dynamic decomposition approach
Rebecca Riley, Chiara Rosazza Bondibene and Garry Young
8 July 2014 ESRC Research Methods Festival 2014, St Catherine’s College Oxford

Productivity Dynamics in the Great Stagnation: Evidence from British Businesses
Rebecca Riley, Chiara Rosazza Bondibene and Garry Young
28 July 2014 WPEG Annual Conference, Sheffield

"Bank Credit Conditions and their Influence on Productivity Growth: Company-level Evidence"
Rebecca Riley, Chiara Rosazza Bondibene and Garry Young
11 November 2014 Productivity and Firm Growth Workshop NIESR

"Bank Credit Conditions and Productivity Growth: Company-level Evidence"
Rebecca Riley, Chiara Rosazza Bondibene and Garry Young
19 January 2015 NESTA/NIESR, ERC & BIS Productivity Research Symposium

Bank Credit Conditions and their Influence on Productivity Growth: Company-level Evidence
Rebecca Riley, Chiara Rosazza Bondibene and Garry Young
Seminar, Bank of England 17 February 2015

Events

The Impact of the Financial Crisis on UK Company Performance
Bank of England/NIESR Special Session
RES 2014 Annual Conference, Manchester
Monday 7th April 2014

Link to special edition of National Institute Economic Review, May 2014 and accompanying press release

Financial crisis and Economic Performance
Introduction to National Institute Economic Review, May 2014
Rebecca Riley and Garry Young