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Finance and International Trade: A Review of the Literature

Author

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  • Anne-Gaël Vaubourg

Abstract

The aim of this paper is to review the literature on the links between finance and international trade. First, sectors? or firms? external financial dependence appears to be a key determinant of export performance. More vulnerable firms or sectors export less than others. Moreover, insufficient financial development and financial crises harm exports to a greater extent when firms or sectors rely on external finance. Second, trade finance, such as letters of credit or trade insurance, plays a key role in financing trade and provides a powerful transmission channel for financial shocks and banking crisis. Finally, we emphasize the complexity of the relationship between finance and trade. On the one hand, finance is also driven by trade patterns such that the causality between both phenomena is bidirectional. On the other hand, there exist institutional interactions between financial and trade reforms.

Suggested Citation

  • Anne-Gaël Vaubourg, 2016. "Finance and International Trade: A Review of the Literature," Revue d'économie politique, Dalloz, vol. 126(1), pages 57-87.
    • Handle: RePEc:cai:repdal:redp_261_0057
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    Citations

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    Cited by:

    1. Lutz, Flora & Zessner-Spitzenberg, Leopold, 2023. "Sudden stops and reserve accumulation in the presence of international liquidity risk," Journal of International Economics, Elsevier, vol. 141(C).
    2. S K Gnangnon, 2023. "Effect of Aid for Trade on Financial Development," Economic Issues Journal Articles, Economic Issues, vol. 28(2), pages 1-38, September.
    3. Nuno Calheiros-Lobo & José Vasconcelos Ferreira & Manuel Au-Yong-Oliveira, 2023. "SME Internationalization and Export Performance: A Systematic Review with Bibliometric Analysis," Sustainability, MDPI, vol. 15(11), pages 1-36, May.
    4. Guo, Yibei & Dong, Baomin, 2021. "Railway and trade in modern China: Evidence from the 1930s," China Economic Review, Elsevier, vol. 69(C).
    5. Gnangnon, Sèna Kimm, 2022. "Effect of structural economic vulnerability on the participation in international trade," EconStor Preprints 262004, ZBW - Leibniz Information Centre for Economics.
    6. Gnangnon, Sèna Kimm, 2022. "The Least Developed Countries' Services Waiver and the Stability of Least Developed Countries' Services Exports," EconStor Preprints 260587, ZBW - Leibniz Information Centre for Economics.
    7. David Kohn & Fernando Leibovici & Michal Szkup, 2021. "Financial Frictions and International Trade," Working Papers 2021-009, Federal Reserve Bank of St. Louis.
    8. Lutz, Flora & Zessner-Spitzenberg, Leopold, 2020. "Sudden Stops and Reserve Accumulation in the Presence of International Liquidity Risk," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224520, Verein für Socialpolitik / German Economic Association.
    9. Nguyen, Quyen T.K. & Almodóvar, Paloma & Wei, Ziyi, 2022. "Intra-firm and arm’s length export propensity and intensity of MNE foreign subsidiaries," Journal of Business Research, Elsevier, vol. 145(C), pages 288-308.
    10. Sèna Kimm Gnangnon, 2019. "Effect of Export Upgrading on Financial Development," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 10(03), pages 1-37, October.
    11. David Kohn & Fernando Leibovici & Michal Szkup, 2021. "Financial Frictions and International Trade," Working Papers 2021-009, Federal Reserve Bank of St. Louis.
    12. Bošnjak Mile, 2019. "Determinants of Current Account in Cases of Serbia and Romania: Time-Varying Parameters Approach," South East European Journal of Economics and Business, Sciendo, vol. 14(1), pages 21-33, June.
    13. Gnangnon, Sèna Kimm & Iyer, Harish, 2021. "Effect of Aid for Trade and Foreign Direct Investment Inflows on the Utilization of Unilateral Trade Preferences offered by the QUAD countries," EconStor Preprints 238211, ZBW - Leibniz Information Centre for Economics.

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