Financing Time to Trade: Evidence from French firms

Pauline Bourgeon, Jean-Charles Bricongne and Guillaume Gaulier

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: Using a very detailed set of French firms' data on trade flows and balance sheets, this paper analyses to what extent firms' financial frictions, considered as the interaction of financial dependence and financial constraints, and trading time affect their trade flows. In this empirical study the main indicator taken for firm's financial constraint, namely payment incident occurring at firm's partner is exogenous, whereas "traditional" financial indicators in other studies are not. The notion of trading time encompasses the whole time-lag between the production of export goods and the receiving of the revenues generated by these exports (time in transit, time at borders, etc.). In estimations, we both use distance as a proxy and a precise indicator computed by adding shipping time and average time spent at borders (only available for a sub-sample of extra-EU countries). The empirical results obtained so bring evidence that trading time amplifies the negative effect of financial restrictions on trade. By computing the marginal effect of financial constraint over bilateral trade we confirm that it represents a significant barrier to export for destinations beyond 3500 kilometers away

Keywords: Distance interaction; financial frictions; gravity equations; trade patterns; trading time (search for similar items in EconPapers)
JEL-codes: F02 F10 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2012-03
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://mse.univ-paris1.fr/pub/mse/CES2012/12016.pdf (application/pdf)

Related works:
Working Paper: Financing time to trade: Evidence from French firms (2012)
Working Paper: Financing time to trade: Evidence from French firms (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:12016

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