Finance, Comparative Advantage, and Resource Allocation
Melise Jaud (),
Madina Kukenova and
No 2013:13, Working Papers from Lund University, Department of Economics
We show that exported products exit the US market sooner if they violate the Heckscher-Ohlin notion of comparative advantage. Crucially, this pattern is stronger when exporting country has a well-developed banking system, measured by a high ratio of bank credit over the GDP. Banks thus push firms away from exports that are facing an uphill battle on a competitive foreign market due to a suboptimal use of the domestic factor endowment. Our results imply a disciplining role for bank credit in terminating inefficient trade flows. This constitutes a new channel through which finance improves resource allocation in the real economy.
Keywords: resource misallocation; …nance; comparative advantage; export survival (search for similar items in EconPapers)
JEL-codes: F11 G21 G30 O16 (search for similar items in EconPapers)
Pages: 36 pages
New Economics Papers: this item is included in nep-int
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Journal Article: Finance, Comparative Advantage, and Resource Allocation (2018)
Working Paper: Finance, Comparative Advantage, and Resource Allocation (2014)
Working Paper: Finance, Comparative Advantage, and Resource Allocation (2013)
Working Paper: Finance, comparative advantage, and resource allocation (2012)
Working Paper: Finance, Comparative Advantage, and Resource Allocation (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:lunewp:2013_013
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