Credit frictions, selection into external finance and gains from trade
Publikation: Beiträge in Zeitschriften › Zeitschriftenaufsätze › Forschung › begutachtet
Authors
This paper analyzes the effects of credit frictions in a trade model where heterogeneous firms select both into exporting and into two types of external finance. While small producers face stronger credit frictions and rely on bank finance, large firms have access to cheaper bond finance. The analysis shows that a bank credit shock leads to an increase in the share of firms that use bond finance. This selection effect is used to explain the observed decrease in bank finance relative to bond finance during the global financial crisis of 2007–2009. A calibration of the model to the crisis period documents that endogenous selection into external finance reduces the negative implications of credit frictions on product variety, exports and gains from trade.
| Originalsprache | Englisch |
|---|---|
| Zeitschrift | Canadian Journal of Economics |
| Jahrgang | 54 |
| Ausgabenummer | 3 |
| Seiten (von - bis) | 1206-1251 |
| Anzahl der Seiten | 46 |
| ISSN | 0008-4085 |
| DOIs | |
| Publikationsstatus | Erschienen - 01.11.2021 |
| Extern publiziert | Ja |
Bibliographische Notiz
Funding Information:
For helpful comments and suggestions, I am grateful to two anonymous referees, Daniel Baumgarten, Roberto Bonfatti, Wanyu Chung, Carsten Eckel, Hartmut Egger, Peter Egger, Gabriel Felbermayr, Lisandra Flach, Michael Irlacher, Sebastian Krautheim, Udo Kreickemeier, Kalina Manova, Alejandro Riano, Monika Schnitzer, Jens Südekum and Jens Wrona as well as participants of the Annual Conference of the German Economic Association in Augsburg, the 15th Annual GEP Postgraduate Conference in Nottingham, the 7th Annual Meeting on Economic Geography and International Trade (EGIT) in Frankfurt, Fall Midwest International Trade Meetings at the Pennsylvania State University, the 17th Annual Conference of the European Trade Study Group in Paris, Warsaw International Economic Meeting and the 17th Workshop “Internationale Wirtschaftsbeziehungen” in Goettingen. Financial support by the German Science Foundation through the Collaborative Research Centre TRR 190 is gratefully acknowledged.
Publisher Copyright:
© 2021 The Authors. Canadian Journal of Economics/Revue canadienne d'économique published by Wiley Periodicals LLC on behalf of Canadian Economics Association.
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