Credit frictions, selection into external finance and gains from trade

Research output: Journal contributionsJournal articlesResearchpeer-review

Standard

Credit frictions, selection into external finance and gains from trade. / Unger, Florian.
In: Canadian Journal of Economics, Vol. 54, No. 3, 01.11.2021, p. 1206-1251.

Research output: Journal contributionsJournal articlesResearchpeer-review

Harvard

APA

Vancouver

Bibtex

@article{d2569e3172b546bc847a908ab2765838,
title = "Credit frictions, selection into external finance and gains from trade",
abstract = "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.",
keywords = "Economics",
author = "Florian Unger",
note = "Publisher Copyright: {\textcopyright} 2021 The Authors. Canadian Journal of Economics/Revue canadienne d'{\'e}conomique published by Wiley Periodicals LLC on behalf of Canadian Economics Association.",
year = "2021",
month = nov,
day = "1",
doi = "10.1111/caje.12529",
language = "English",
volume = "54",
pages = "1206--1251",
journal = "Canadian Journal of Economics",
issn = "0008-4085",
publisher = "Wiley-Blackwell Publishing, Inc.",
number = "3",

}

RIS

TY - JOUR

T1 - Credit frictions, selection into external finance and gains from trade

AU - Unger, Florian

N1 - Publisher Copyright: © 2021 The Authors. Canadian Journal of Economics/Revue canadienne d'économique published by Wiley Periodicals LLC on behalf of Canadian Economics Association.

PY - 2021/11/1

Y1 - 2021/11/1

N2 - 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.

AB - 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.

KW - Economics

UR - http://www.scopus.com/inward/record.url?scp=85116897615&partnerID=8YFLogxK

U2 - 10.1111/caje.12529

DO - 10.1111/caje.12529

M3 - Journal articles

AN - SCOPUS:85116897615

VL - 54

SP - 1206

EP - 1251

JO - Canadian Journal of Economics

JF - Canadian Journal of Economics

SN - 0008-4085

IS - 3

ER -

DOI