Financing Constraints, Firm Dynamics, and International Trade

Gross, Till; Verani, Stéphane

doi:10.2139/ssrn.2143790

Cited by 15 publications

(13 citation statements)

References 51 publications

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“…All foreign (i.e.,multinational) …rms are de…ned exclusive of those originating in Hong Kong, Macau, or Taiwan (H/M/T), except in the …nal row of the table. (14) .444 .309 3.980 4.027 Manufacture of Beverages (15) .474 .422 2.942 3.072 Manufacture of Tobacco (16) .416 .669 .667 1.315 Manufacture of Textile (17) . are reported in square brackets.…”

Section: Resultsmentioning

confidence: 99%

“…We …rst construct a dummy for multinationals to distinguish foreign from non-foreign …rms. 17 In a robustness check, we consider a broader classi…cation of multinationals by including the Hong Kong/Macao/Taiwan (H/M/T)-invested …rms. 18 For SOEs, the number was small enough (41,092 or 3.8% of the sample) that we decided to drop them from the estimation.…”

Section: Firm-level Datamentioning

confidence: 99%

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Exports and Credit Constraints under Incomplete Information: Theory and Evidence from China

Feenstra

2014

Review of Economics and Statistics

463

294

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This paper examines why credit constraints for domestic and exporting firms arise in a setting where banks do not observe firms' productivities. To maintain incentive-compatibility, banks lend below the amount needed for first-best production. The longer time needed for export shipments induces a tighter credit constraint on exporters than on purely domestic firms, even in the exporters' home market. Greater risk faced by exporters also affects the credit extended by banks. Extra fixed costs reduce exports on the extensive margin, but can be offset by collateral held by exporting firms. The empirical application to Chinese firms strongly supports these theoretical results, and we find a sizable impact of the financial crisis in reducing exports.

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Section: Resultsmentioning

confidence: 99%

Section: Firm-level Datamentioning

confidence: 99%

Exports and Credit Constraints under Incomplete Information: Theory and Evidence from China

Feenstra

2014

Review of Economics and Statistics

463

294

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“…9 For quantitative studies of the role of financial frictions in accounting for firms' export decisions, see Kohn, Leibovici, and Szkup (2012) and Gross and Verani (2012).…”

Section: Calibrate the Model To Match Key Features Of Firm-level Damentioning

confidence: 99%

Financial Development and International Trade

Leibovici

2013

SSRN Journal

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-------------------------------------This paper studies the extent to which frictions in financial markets affect aggregate trade flows. I study a model of firm dynamics with financial frictions and international trade, calibrated to match key features of firm-level data. I find that, while financial frictions have a large effect on the pattern and extent of international trade at the industry-level, as documented in the literature, they have a small effect on trade at the aggregate-level. Relaxing the financial constraints allows more firms to finance the upfront export entry costs, with a significant impact on industry-level trade flows to the extent that the industry is small enough to affect equilibrium prices. In contrast, removing the financial constraints at the aggregate-level leads to an increase in the wage and interest rate, thereby reducing the returns to becoming an exporter, with a small impact on aggregate trade flows. I also find that the cross-industry response of international trade to financial development is quantitatively consistent with industry-level evidence on the extent of trade across countries, and that the effectiveness of policies aimed at increasing trade by easing the access to credit for exporters is limited if implemented at an economy-wide scale.--

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“…Early papers that study the effects of financial constraints on export decisions are Chaney (2013) and Manova (2013), which introduce financial constraints into a standard static Melitz (2003) model. In parallel work, Gross and Verani (2013) also study the role of financial frictions in accounting for new exporter dynamics. In contrast to their work, we calibrate and examine the quantitative implications of our model using plant-level data.…”

Section: Introductionmentioning

confidence: 99%

Financial Frictions and New Exporter Dynamics

2014

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This article studies the role of financial frictions as a barrier to international trade. We study new exporter dynamics to identify how these frictions affect export decisions. We introduce a borrowing constraint and working capital requirements into a standard model of international trade, with exports more working capital intensive than domestic sales. Our model can quantitatively account for new exporter dynamics in contrast to a model with sunk export entry costs. We provide additional evidence in support of our mechanism. We find that financial frictions reduce the impact of trade liberalization, suggesting that they constitute an important trade barrier. * Manuscript

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Financing Constraints, Firm Dynamics, and International Trade

Cited by 15 publications

References 51 publications

Exports and Credit Constraints under Incomplete Information: Theory and Evidence from China

Exports and Credit Constraints under Incomplete Information: Theory and Evidence from China

Financial Development and International Trade

Financial Frictions and New Exporter Dynamics

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