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Credit Constraints, Heterogeneous Firms and International Trade

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TLDR
This article examined the detrimental consequences of financial market imperfections for international trade and developed a heterogeneous-firm model with countries at different levels of financial development and sectors of varying financial vulnerability.
Abstract
This paper examines the detrimental consequences of financial market imperfections for international trade. I develop a heterogeneous-firm model with countries at different levels of financial development and sectors of varying financial vulnerability. Applying this model to aggregate trade data, I study the mechanisms through which credit constraints operate. First, financial development increases countries' exports above and beyond its impact on overall production. Firm selection into exporting accounts for a third of the trade-specific effect, while two thirds are due to reductions in firm-level exports. Second, financially advanced economies export a wider range of products and their exports experience less product turnover. Finally, while all countries service large destinations, exporters with superior financial institutions have more trading partners and also enter smaller markets. All of these effects are magnified in financially vulnerable sectors. These results have important policy implications for less developed economies that rely on exports for economic growth but suffer from poor financial contractibility.

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Imports and credit rationing: A firm‐level investigation

TL;DR: In this article, the authors investigate the relationship between financial constraints and imports of intermediate inputs using a large sample of small and medium-sized enterprises from 66 developing countries and provide robust evidence of a statistically and economically significant restraining effect of credit constraints on both the probability of importing intermediates and the incidence of imported intermediates in total input expenditure.
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Financial structure effects on export intensity and diversification: the case of Portuguese industrial firms

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Trade Flows in Developing Countries: What is the Role of Trade Finance?

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“Glocal” ties: banking development and SEs’ export entry

TL;DR: In this article, the authors explore the impact of the banking sector development on the first time export entry of small enterprises (SEs) in the Turkish manufacturing sector, and provide original evidence on the role of the territorial diffusion of foreign banks' branches on SEs' exports.
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Law and Finance

TL;DR: This paper examined legal rules covering protection of corporate shareholders and creditors, the origin of these rules, and the quality of their enforcement in 49 countries and found that common law countries generally have the best, and French civil law countries the worst, legal protections of investors.
Journal ArticleDOI

Law and Finance

TL;DR: In this article, the authors examined legal rules covering protection of corporate shareholders and creditors, the origin of these rules, and the quality of their enforcement in 49 countries and found that common-law countries generally have the strongest, and French civil law countries the weakest, legal protections of investors, with German- and Scandinavian-civil law countries located in the middle.
Journal ArticleDOI

The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity

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Journal ArticleDOI

Finance and Growth: Schumpeter Might Be Right

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ReportDOI

Financial Dependence and Growth

TL;DR: This paper examined whether financial development facilitates economic growth by scrutinizing one rationale for such a relationship; that financial development reduces the costs of external finance to firms, and found that industrial sectors that are relatively more in need of foreign finance develop disproportionately faster in countries with more developed financial markets.
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