Dissecting the Effect of Credit Supply on Trade: Evidence from Matched Credit-Export Data

48 Pages Posted: 15 Mar 2011 Last revised: 10 Jun 2013

Daniel Paravisini

London School of Economics & Political Science (LSE)

Veronica Rappoport

London School of Economics & Political Science (LSE)

Philipp Schnabl

New York University (NYU) - Department of Finance; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Daniel Wolfenzon

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: June 10, 2013

Abstract

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.

Suggested Citation

Paravisini, Daniel and Rappoport, Veronica and Schnabl, Philipp and Wolfenzon, Daniel, Dissecting the Effect of Credit Supply on Trade: Evidence from Matched Credit-Export Data (June 10, 2013). Available at SSRN: https://ssrn.com/abstract=1786044 or http://dx.doi.org/10.2139/ssrn.1786044

Daniel Paravisini

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Veronica Rappoport

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Philipp Schnabl

New York University (NYU) - Department of Finance ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States

HOME PAGE: http://pages.stern.nyu.edu/~sternfin/pschnabl/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Daniel Wolfenzon (Contact Author)

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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