Studying the Effects of Household and Firm Credit on the Trade Balance: The Composition of Funds Matters

14 Pages Posted: 26 Oct 2009

See all articles by Berrak Buyukkarabacak

Berrak Buyukkarabacak

Ozyegin University

Stefan Krause

Banque de France - Economic Study and Research Division; Sciences Po

Abstract

In this article, we focus on distinguishing between household and corporate sector credit and investigate the effects these two types of credit have on the trade balance. A higher level of private credit indicates better developed financial markets and easier credit access for businesses and households. Yet, both types of borrowers vary in terms of the use of credit. Our model and empirical analysis suggest that the composition of credit does matter for the trade balance: lending to consumers has a negative effect on net exports, while firm loans contribute to a rise in net exports. (JEL F32, F41, G21)

JEL Classification: F32, F41, G21

Suggested Citation

Bahadir, Berrak and Krause, Stefan, Studying the Effects of Household and Firm Credit on the Trade Balance: The Composition of Funds Matters. Economic Inquiry, Vol. 47, Issue 4, pp. 653-666, October 2009, Available at SSRN: https://ssrn.com/abstract=1493455 or http://dx.doi.org/10.1111/j.1465-7295.2008.00173.x

Berrak Bahadir (Contact Author)

Ozyegin University ( email )

Kusbakisi Cd. No: 2
Altunizade Uskudar
Istanbul, 34662
Turkey

Stefan Krause

Banque de France - Economic Study and Research Division ( email )

31, rue Croix des Petits Champs
75049 Paris Cedex 01
FRANCE

Sciences Po ( email )

27 rue Saint-Guillaume
Paris Cedex 07, 75337
France

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