Finance, Comparative Advantage, and Resource Allocation

Melise Jaud (mjaud@worldbank.org), Madina Kukenova and Martin Strieborny

No 2013/11, Knut Wicksell Working Paper Series from Lund University, Knut Wicksell Centre for Financial Studies

Abstract: 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, finance, comparative advantage, ex- port survival

Keywords: Resource misallocation; finance; comparative advantage; ex-port survival (search for similar items in EconPapers)
JEL-codes: F11 G21 G30 O16 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2013-06-19
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.lusem.lu.se/media/kwc/working-papers/kwc-wp-2013-11.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.lusem.lu.se/media/kwc/working-papers/kwc-wp-2013-11.pdf [301 Moved permanently]--> https://www.lusem.lu.se/media/kwc/working-papers/kwc-wp-2013-11.pdf)

Related works:
Journal Article: Finance, Comparative Advantage, and Resource Allocation (2018)
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)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:luwick:2013_011

Access Statistics for this paper

More papers in Knut Wicksell Working Paper Series from Lund University, Knut Wicksell Centre for Financial Studies Knut Wicksell Centre for Financial Studies, Lund University School of Economics and Management, P.O. Box 7082, S-220 07 Lund, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Jens Forssbaeck (jens.forssbaeck@nek.lu.se) and Frederik Lundtofte (frederik.lundtofte@nek.lu.se this e-mail address is bad, please contact repec@repec.org).