Dissecting the effect of credit supply on trade: evidence from matched credit-export data

Daniel Paravisini, Veronica Rappoport, Philipp Schnabl and Daniel Wolfenzon

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We estimate the elasticity of exports to credit using matched customs and firm-level bank credit data from Peru. To account for non-credit determinants of exports, we compare changes in exports of the same product and to the same destination by firms borrowing from banks differentially affected by capital-flow reversals during the 2008 financial crisis. We find that credit shocks affect the intensive margin of exports, but have no significant impact on entry or exit of firms to new product and destination markets. Our results suggest that credit shortages reduce exports through raising the variable cost of production, rather than the cost of financing sunk entry investments.

Keywords: trade finance; lending channel; financial crisis (search for similar items in EconPapers)
JEL-codes: F3 G3 (search for similar items in EconPapers)
Date: 2015-01-01
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (184)

Published in Review of Economic Studies, 1, January, 2015, 82(1), pp. 333 - 359. ISSN: 0034-6527

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http://eprints.lse.ac.uk/59575/ Open access version. (application/pdf)

Related works:
Journal Article: Dissecting the Effect of Credit Supply on Trade: Evidence from Matched Credit-Export Data (2015)
Working Paper: Dissecting the Effect of Credit Supply on Trade: Evidence from Matched Credit-Export Data (2011)
Working Paper: Dissecting the Effect of Credit Supply on Trade: Evidence from Matched Credit-Export Data (2011)
Working Paper: Dissecting the Effect of Credit Supply on Trade: Evidence from Matched Credit-Export Data (2010)
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