Intermediated Trade and Credit Constraints: The Case of Firm's Imports

42 Pages Posted: 30 Nov 2021

See all articles by Francesco Nucci

Francesco Nucci

University of Rome I

Filomena Pietrovito

University of Molise

Alberto F. Pozzolo

Roma Tre University

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Abstract

We investigate if credit constraints introduce a degree of difference among firms in their mode of importing. First, we develop a simple theoretical framework highlighting the possible links between credit constraints and reliance on import intermediaries, and then use firm-level data from 66 countries to test the model’s predictions. The results show that credit-constrained firms exhibit a higher probability of importing their inputs using an intermediary, while unconstrained firms are more likely to import directly. Our results also establish that the impact of credit constraints on the probability of indirect importing is amplified for firms with a higher distance from their international sourcing network. Moreover, if firms face other types of frictions to import, then the probability that credit-constrained firms rely on intermediaries is estimated to be higher. Remarkably, credit rationing affects the probability of indirect importing no matter what the mode of exporting is.

Keywords: Firms' Import Mode, Trade Intermediaries, financial constraints

Suggested Citation

Nucci, Francesco and Pietrovito, Filomena and Pozzolo, Alberto F., Intermediated Trade and Credit Constraints: The Case of Firm's Imports. Available at SSRN: https://ssrn.com/abstract=3970458 or http://dx.doi.org/10.2139/ssrn.3970458

Francesco Nucci (Contact Author)

University of Rome I ( email )

Piazzale Aldo Moro
Rome, 00185
Italy
+39 06 4991 0847 (Phone)
+39 06 445 3246 (Fax)

Filomena Pietrovito

University of Molise ( email )

Via F. de Sanctis s.n.c.
Campobasso, Campobasso (CB) 86100
Italy

Alberto F. Pozzolo

Roma Tre University ( email )

Via Ostiense 163
Roma, RM 00154
Italy

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