Dissecting the Effect of Credit Supply on Trade: Evidence from Matched Credit-Export Data
London School of Economics & Political Science (LSE); Columbia Business School - Finance and Economics
London School of Economics & Political Science (LSE)
New York University (NYU) - Department of Finance; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)
Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)
June 10, 2013
We estimate the elasticity of exports to credit using matched customs and firm-level bank credit data from Peru. To account for non-credit determinants of exports, we compare changes in exports of the same product and to the same destination by firms borrowing from banks differentially affected by capital flow reversals during the 2008 financial crisis. We obtain elasticity estimates for the intensive and extensive margins of exports, size and frequency of shipments, and the method of freight and payment. Our results suggest that the credit shortage reduces exports through raising the variable cost of production, rather than the cost of financing sunk entry investments.
Number of Pages in PDF File: 48
Date posted: March 15, 2011 ; Last revised: June 10, 2013
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