Topic: Capital Allocation Across Sectors: Evidence from a Boom in Agriculture

Speaker: Jacopo Ponticelli, Assistant Professor in Finance, Booth School of Business, University of Chicago

Date: December 16th (Wednesday.)

Time: 2:00-3:30pm

Location: Building 4, Room 101

Language: English

Abstract:

We study the allocation of capital across sectors. In particular, we assess to what extent growth in agricultural profits can lead to an increase in the supply of credit in industry and services. For this purpose, we identify an exogenous increase in agricultural profits due to the adoption of genetically engineered soy in Brazil. The new agricultural technology had heterogeneous effects in areas with different soil and weather characteristics. We find that regions with larger increases in agricultural profitability experienced increases in local bank deposits. However, there was no increase in local bank lending. Instead, capital was reallocated towards other regions through bank branch networks. Regions with more bank branches receiving funds from soy areas experienced both an increase in credit supply and faster growth of small and medium sized firms.

About the speaker:

Jacopo Ponticelli holds the Assistant Professor in Finance at the Booth School of Business, University of Chicago. He received a Ph.D. in Economics from the University Pompeu Fbra in 2013. Dr. Ponticelli’s research interests include corporate finance, development economics and applied economics. He has articles published in the Quarterly Journal of Economics, and the American Economic Review.