Credit markets and patterns of international trade

Kletzer, Kenneth M.; Bardhan, Pranab

doi:10.1016/0304-3878(87)90006-x

Cited by 335 publications

(276 citation statements)

References 8 publications

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“…With regard to the link between financial development and trade openness, countries with a relatively well-developed finance sector are shown to have a comparative advantage in industries and sectors that rely on external finance (Kletzer and Bardhan 1987). Extending this argument and allowing one sector of a two-sector model to be more credit intensive due to increasing returns to scale, the level of financial development is found to affect the structure of the trade balance (Beck 2002).…”

Section: Literature Reviewmentioning

confidence: 94%

Institutional Quality, Trade Openness, and Financial Sector Development in Asia: An Empirical Investigation

Kim

Lee

2015

Emerging Markets Finance and Trade

163

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The views expressed in this paper are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. Terms of use: Documents inADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use.By making any designation of or reference to a particular territory or geographic area, or by using the term "country" in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area. Note: In this publication, "$" refers to US dollars.The ADB Economics Working Paper Series is a forum for stimulating discussion and eliciting feedback on ongoing and recently completed research and policy studies undertaken by the Asian Development Bank (ADB) staff, consultants, or resource persons. The series deals with key economic and development problems, particularly those facing the Asia and Pacific region; as well as conceptual, analytical, or methodological issues relating to project/program economic analysis, and statistical data and measurement. The series aims to enhance the knowledge on Asia's development and policy challenges; strengthen analytical rigor and quality of ADB's country partnership strategies, and its subregional and country operations; and improve the quality and availability of statistical data and development indicators for monitoring development effectiveness.

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Section: Literature Reviewmentioning

confidence: 94%

Institutional Quality, Trade Openness, and Financial Sector Development in Asia: An Empirical Investigation

Kim

Lee

2015

Emerging Markets Finance and Trade

163

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“…This work builds on the analysis of Kletzer & Bardhan (1987), which provides one of the earliest theoretical papers to emphasize the impact of financial institutions on patterns of comparative advantage. Subsequent empirical papers, initially using industry-level data, such as Beck (2003), Hur et al (2006) and Manova (2008a), support the view that financial frictions are an important determinant of trade flows.…”

Section: Related Literaturementioning

confidence: 99%

Trade And Financial Sector Reforms : Interactions And Spillovers

Taylor¹

2010

Policy Research Working Papers

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The allocation of production across firms is a potentially important explanation of the productivity gap between rich and poor economies. Reforms to trade policy and the domestic financial sector are often both key elements of policy packages aimed at reducing productive distortions. However, the impact of each reform in reallocating production within an economy is usually analysed independently. This paper asks how do such general equilibrium effects of trade and domestic financial sector reforms interact in terms of their effects on productivity, wages and utility. Motivated by recent firm-level studies, I add two-way linkages between firms' production and exporting decisions and their financial constraints to a general equilibrium heterogeneous firm trade model. The interaction effects between reforms appear qualitatively important. Trade and domestic financial sector reforms have complementary effects on the average productivity and size of domestic producers. However, if much reallocative work has already been done through a well-functioning financial sector, the marginal benefits of trade liberalization for wages and household utility are reduced. Improvements in the ability to use exports as pledgable collateral enhance both the wage and productivity effects of trade reforms. The model also highlights the potential for financial sector reforms in one economy to be exported via the trade channel, affecting decisions to produce or export in the foreign economy and putting downward pressure on foreign real wages.

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“…The Heckscher-Ohlin model predicts the factor endowment to be a determinant of trade patterns. In this respect Kletzer and Bardhan (1987), building on the Heckscher-Ohlin model, is the first study providing a theoretical framework where credit market imperfections (when credit for working capital or trade finance is needed to pay for the cost of inputs before the receipt of revenues from sales) can lead to different comparative costs even with identical technologies and endowments (which has been a central theme in the North-South trade literature 2 ).…”

Section: Financial Development Pattern Of Specialization and S-s Tradementioning

confidence: 99%

“…In recent years a growing body of research has pointed out the level of financial development as a source of comparative advantage in international trade (Kletzer and Bardhan, 1987;Demirguc-Kunt and Maksimovic, 1998;Rajan and Zingales, 1998;Beck, 2002Beck, , 2003Svaleryd and Vlachos, 2005).…”

Section: Introductionmentioning

confidence: 99%

“…In particular, developing countries (the South) with low levels of financial development are found to have lower export shares and trade balances in industries (such as manufactures) that depend more on external finance. Given that industries with higher external finance needs also have larger scales, higher research and development (R&D), higher working capital and value-added in production (Kletzer and Bardhan, 1987;Rajan and Zingales, 1998;Beck, 2002;Braun and Larrain, 2005), these findings have significant implications for development and long term growth in the South. Nevertheless, previous studies on the relationship between financial development and export structure have not differentiated the direction of trade within and between developing and developed countries.…”

Section: Introductionmentioning

confidence: 99%

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Asymmetric effects of financial development on South–South and South–North trade: Panel data evidence from emerging markets

Demir

Dahi

2011

Journal of Development Economics

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Using bilateral trade data in total and technology-and-skill-intensive manufactured goods for 28 developing countries that account for 82% of all developing country manufactures exports between 1978 and 2005, this paper explores the effects of financial development on the pattern of specialization in South-South and South-North trade. The empirical results using dynamic panel regressions and comprehensive sensitivity tests suggest that financial development in the South has an economically and statistically significant positive effect on the share of total and technology-andskill-intensive manufactures exports in GDP, and total exports in South-South trade. In contrast, no such significant or robust effect of financial development is found in South-North trade. Overall, the positive effect of financial development is found to be asymmetric favoring South-South significantly more than South-North trade. In addition, financial development is found to be increasing technologyand-skill-intensive manufactured goods exports significantly more than total manufactured or merchandise goods exports. JEL Classification Codes: F14; F15; G10; O16; O54

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Credit markets and patterns of international trade

Cited by 335 publications

References 8 publications

Institutional Quality, Trade Openness, and Financial Sector Development in Asia: An Empirical Investigation

Institutional Quality, Trade Openness, and Financial Sector Development in Asia: An Empirical Investigation

Trade And Financial Sector Reforms : Interactions And Spillovers

Asymmetric effects of financial development on South–South and South–North trade: Panel data evidence from emerging markets

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