Are You Experienced? Survival and Recovery of Trade Relations after Banking Crises

World Trade Organization Staff Working Paper No. ERSD-2011-03

28 Pages Posted: 5 Apr 2011

See all articles by Cosimo Beverelli

Cosimo Beverelli

World Trade Organization (WTO); European University Institute

Nadia Rocha

World Trade Organization

Madina Kukenova

Webster University Geneva; Business School Lausanne

Date Written: March 10, 2011

Abstract

We examine the impact of banking crises on the duration of trade relations. We also investigate the effect of product-level characteristics, such as the size of exports and exporting experience, and of sector-level financial dependence variables, on the time to recover after a banking crisis. Using highly disaggregated US import data from 157 countries between 1996 and 2009, we first provide evidence that banking crises negatively affect the survival of trade relations. On average, the occurrence of a banking crisis decreases the rate of survival of trade relations by 13 percent. Moreover, we find that both the size of exports and exporting experience matter for recovery of trade relations after banking crises. Sectoral financial dependence has an experience-specific effect. Relations with more experience recover faster in financially dependent sectors. There is instead no clear evidence indicating effects of size heterogeneity, neither in financially dependent sectors nor in non-financially dependent ones. The results are robust and consistent across alternative econometric models.

Keywords: banking crises, financial dependence, export experience, duration models

JEL Classification: G01, C41, F14

Suggested Citation

Beverelli, Cosimo and Rocha, Nadia and Kukenova, Madina, Are You Experienced? Survival and Recovery of Trade Relations after Banking Crises (March 10, 2011). World Trade Organization Staff Working Paper No. ERSD-2011-03. Available at SSRN: https://ssrn.com/abstract=1803251 or http://dx.doi.org/10.2139/ssrn.1803251

Cosimo Beverelli

World Trade Organization (WTO) ( email )

Rue de Lausanne 154
Geneva, 1202
Switzerland

European University Institute ( email )

Villa Schifanoia
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Firenze (Florence), Tuscany 50014
Italy

Nadia Rocha (Contact Author)

World Trade Organization ( email )

Rue de Lausanne 154
CH-1211 Geneva
Switzerland

Madina Kukenova

Webster University Geneva ( email )

15, route de Collex
Bellevue, 1293
Switzerland

Business School Lausanne ( email )

Route de la Maladière 21
PO Box 73
Lausanne, 1022
Switzerland

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