Trade and Finance: Is There More than Just 'Trade Finance'? Evidence from Matched Bank-Firm Data

65 Pages Posted: 2 Apr 2014

Date Written: January 24, 2014

Abstract

Using unique matched bank-firm data on export, import and ordinary loans for a large sample of Italian manufacturing exporters for the years 2007-2010, this paper investigates the role of trade finance in a credit shock. We find that the credit shock faced by exporters in the aftermath of the Lehman Brothers' collapse was due more to a diminished availability of ordinary loans than to specific constraints in trade finance. We also show that the credit shock had a negative impact on exports: firms, especially financially distressed ones, that borrowed from banks which were more exposed to a negative funding shock exported less compared with firms that borrowed from less exposed intermediaries.

Keywords: trade finance, trade collapse, credit shocks, export loans

JEL Classification: G21, F14, F30, G30, L20

Suggested Citation

Del Prete, Silvia and Federico, Stefano, Trade and Finance: Is There More than Just 'Trade Finance'? Evidence from Matched Bank-Firm Data (January 24, 2014). Bank of Italy Temi di Discussione (Working Paper) No. 948. Available at SSRN: https://ssrn.com/abstract=2419418 or http://dx.doi.org/10.2139/ssrn.2419418

Silvia Del Prete (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Stefano Federico

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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