Financing time to trade: Evidence from French firms

Pauline Bourgeon (), Jean-Charles Bricongne and Guillaume Gaulier
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Pauline Bourgeon: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, Banque de France

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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: trading time; Distance interaction; financial frictions; gravity equations; trade patterns; trading time.; Contraintes financières; équations de gravité; flux de commerce; temps de transaction. (search for similar items in EconPapers)
Date: 2012-03
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00677343v1
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Published in 2012

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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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