 Financial imperfections, product quality, and international tradeRosario Crino () and Laura Ogliari Journal of International Economics, 2017, vol. 104, issue C, 63-84 Abstract: We study how financial imperfections affect product quality across countries and industries, and analyze the implications for trade flows and prices. To this purpose we assemble a unique data set, which contains estimates of export quality, financial development, and financial vulnerability, for all countries and manufacturing industries over the last three decades. We find the interplay between cross-country differences in financial frictions and cross-industry differences in financial vulnerability to be an important determinant of the geographical and sectoral variation in average product quality. We show that this effect mostly occurs along an intensive margin, whereby financial imperfections distort the quality of existing exports to a given destination market. Finally, we provide evidence that quality adjustments are an important mechanism through which financial development shapes the variation in trade flows and export prices across countries and industries. Keywords: Financial frictions; Financial vulnerability; Product quality; Trade flows and prices; Product-level data (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:104:y:2017:i:c:p:63-84 DOI: 10.1016/j.jinteco.2016.10.005 Access Statistics for this article Journal of International Economics is currently edited by Gourinchas, Pierre-Olivier and RodrÃguez-Clare, Andrés More articles in Journal of International Economics from Elsevier |
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