Trade finance and Latin America's lost decade: The forgotten link

Sebastian Alvarez and Juan Flores Zendejas

Investigaciones de Historia Económica - Economic History Research (IHE-EHR), Journal of the Spanish Economic History Association, 2014, vol. 10, issue 02, 127-139

Abstract: The Great recession has brought back to foreground the link between trade credit, international trade and economic growth. Scholars have recently found that the effects of the fall in trade finance are strong and accurately explain the recent fall in international trade. We argue that the lost decade that followed Latin America's debt crisis is a useful comparative benchmark to recognize the scope of impact on international trade stemming from a sharp decline in trade finance. The years that followed the Mexican debt default of 1982 experienced a decrease in the financial flows to the region. However, the lending policies adopted by export agencies had a countercyclical effect. They reacted to defaults by suspending their cover activities for exports to defaulting countries, but soon reintroduced them once governments entered into a credit program from the IMF. This paper is the first to estimate the impact of trade finance on international trade in the aftermath of Latin America's debt crisis. KEY Classification-JEL: F34. F42. G01. N16

Keywords: Trade; finance.; Debt; crisis.; Financial; crises (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://recyt.fecyt.es/index.php/IHE/article/view/70627/42752 (application/pdf)
This is an Open Access journal

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ahe:invest:v:10:y:2014:i:02:p:127-139

Access Statistics for this article

More articles in Investigaciones de Historia Económica - Economic History Research (IHE-EHR), Journal of the Spanish Economic History Association from Asociación Española de Historia Económica Contact information at EDIRC.
Bibliographic data for series maintained by Elena Garcia Cruz ().