The SAFE Policy Center and the Centre for Economic Policy Research (CEPR) organize and cordially invite you to attend a web seminar on
The ECB Financial Stability Review November 2024 -
Unpacking the ECB’s latest financial stability review: A focus on risks from bank lending to low-productivity firms, and risks from commercial real estate
Presentation:
Francesca Lenoci, Financial Stability Expert, DGMF/SRF Division
Paul Hiebert, Head of Division, DGMF/SRF Division
Giorgia de Nora, Financial Stability Expert, DGMF/MAP
Moderator: Florian Heider, SAFE, Goethe University, and CEPR
to be held on 25 November 2024, 4:30 p.m. - 5:30 p.m. CET, via Zoom
Abstract:
Low firm productivity: the role of finance and the implications for financial stability
Many factors – economic, financial and structural – shape firm productivity. This special feature zooms in on the role played by finance and the allocation of capital across firms. Aggregate productivity, access to credit and financial stability are closely interlinked. Inefficient allocation of capital can reduce the productive capacity of the economy, leading to subdued income growth and lower financial resilience for all sectors. While euro area firms rely mostly on bank lending to satisfy their funding needs, banks do not generally have a strong track record in distinguishing between more and less-productive firms, as their expertise lies in the assessment of credit risk. They tend to lack the skills needed to evaluate early-stage technologies and hesitate to finance risky innovations that involve intangible assets or other assets that are hard to collateralise. Financial markets and equity investors may be better suited to financing novel but risky projects. A more diversified external funding structure, including further progress on the capital markets union, could help boost the productivity of euro area firms, to the benefit of financial stability.
The attendance is free of charge but registration is required.
