Financial frictions and trade intermediation: Theory and evidence

Chan, Jackie M.L.

doi:10.1016/j.euroecorev.2018.04.002

Cited by 21 publications

(19 citation statements)

References 55 publications

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“…For instance, Chan and Manova 2015 show that financial frictions distort the choice of trade partners. Relatedly, financial frictions determine whether firms use trade intermediaries (Chan 2019) and whether they engage in ordinary or processing trade (Manova and Yu 2016). These additional dimensions complement those reviewed in this paper, and are likely to further amplify the distortionary impact of financial frictions on international trade.…”

Section: Financial Institutionsmentioning

confidence: 58%

Financial Frictions and International Trade

Kohn¹,

Leibovici²,

Szkup³

2021

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This paper reviews recent studies on the impact of financial frictions on international trade. We first present evidence on the relation between measures of access to external finance and export decisions. We then present an analytical framework to analyze the impact of financial frictions on firms' export decisions. Finally, we review recent applications of this framework to investigate the impact of financial frictions on international trade dynamics across firms, industries, and in the aggregate. We discuss related empirical, theoretical, and quantitative studies throughout.

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Section: Financial Institutionsmentioning

confidence: 58%

Financial Frictions and International Trade

Kohn¹,

Leibovici²,

Szkup³

2021

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“…Trade intermediaries can alleviate this problem by screening the quality of the products and revealing it to the customers (Dasgupta and Mondria, 2018). Intermediaries can also facilitate export activity by providing a credit-constrained firm a channel through which capital market frictions are reduced, thus enhancing the gains from trade (Chan, 2018).…”

Section: Empirical and Theoretical Contextmentioning

confidence: 99%

“…While other theoretical models of intermediation exist (cf. Akerman, 2018;Poncet and Xu, 2018;Blum, Claro, and Horstmann, 2018;and Chan, 2018), AKW was the first to be published in a major journal and is the most cited. At the time of this writing, it has been cited 153 times in Scopus, and 596 times in Google Scholar.…”

Section: Introductionmentioning

confidence: 99%

A replication of “The role of intermediaries in facilitating trade” (Journal of International Economics, 2011)

et al. 2020

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This study replicates Ahn, Khandelwal, and Wei's (2011) model of intermediary trade. The study produces two main results. First, the authors are able to reproduce empirical evidence for AKW's three main predictions for Chinese exports. This is impressive because much of the data for their replication are independently sourced. However, when the authors subject their model to additional tests, they find that the evidence is not robust. Using more recently available data to test AKW´s first prediction, the authors estimate coefficients that are wrong-signed and significant. When they re-analyze the evidence supporting the second and third predictions, they find that the full sample results mask significant heterogeneity across Chinese regions. In many cases, key coefficients are insignificant. In a few cases, they are wrong-signed and significant. Finally, using multiple versions of a key variable measuring the number of required import documents by country, the authors discover that the results are not robust across versions.

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“…12 The presence of large trading firms could lead to both high exports per firm and high total exports and explain our IME estimates. While we are unable to identify large trading firms in the EDD data, we estimate the IME based on a sample including only HS 2-digit industries with low shares of firms exporting via intermediaries, as defined in Chan (2017). The results in Online Appendix Table I7 show an almost unchanged IME at 0.53. pct as x pct ij , we run the regressions:…”

Section: Ime By Percentilesmentioning

confidence: 99%