Financial Dependence and Intensive Margin of Trade
60 Pages Posted: 12 Nov 2020 Last revised: 16 Aug 2021
Date Written: August 16, 2021
This paper examines the transmission process from finance to the real economy in the context of product-level export survival. We find that conditional on the specific financial needs of exported products, banks and stock markets play distinctive roles in helping exporters survive in foreign markets. Stock markets rather than banks help exporters who lack easily collateralizable tangible assets. Active rather than large stock markets facilitate exports of products requiring high levels of working capital. And the trade credit can act as a substitute only for bank financing and only in the presence of well-established export links.
Keywords: finance and export survival, transmission from finance to real economy, banks versus stock markets
JEL Classification: F14, G10, G21
Suggested Citation: Suggested Citation