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

49 Pages Posted: 6 Nov 2011

See all articles by Daniel Paravisini

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: May 19, 2011

Abstract

We estimate the elasticity of exports to credit using matched customs and rm-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. A 10% decline in credit reduces by 2.3% the intensive margin of exports, by 3.6% the number of firms that continue supplying a product- destination, but has no effect on the entry margin. Overall,credit shortages explain 15% of the Peruvian exports decline during the crisis.

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 (May 19, 2011). NYU Working Paper No. FIN-11-008. Available at SSRN: https://ssrn.com/abstract=1955415

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 (Contact Author)

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)

London
United Kingdom

Daniel Wolfenzon

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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