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Trade credit, international trade costs and exports: cross-country firm-level evidence

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  • Xiao Wang

Abstract

This article finds that firms' trade credit, the financing provided by upstream input suppliers along the supply chain, plays an important role in determining firms' exportation. In a panel data set of manufacturing firms in 25 Eastern European and Central Asian countries between 2001 and 2007, we employ international trade cost shocks to identify the causal impacts of trade credit on firms' exportation. We find that when trade costs decline, firms with less trade credit increase their exports disproportionately more because of the alleviation of their financing burdens. Results are robust after controlling for bank and other financing channels, country financial development, and the endogeneity of trade credit. Our findings contribute to the empirical identification of financial frictions on firms' exports and to the role of trade credit on firms' performance.

Suggested Citation

  • Xiao Wang, 2015. "Trade credit, international trade costs and exports: cross-country firm-level evidence," Applied Economics Letters, Taylor & Francis Journals, vol. 22(12), pages 993-998, August.
    • Handle: RePEc:taf:apeclt:v:22:y:2015:i:12:p:993-998
    DOI: 10.1080/13504851.2014.995353
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    Cited by:

    1. Onkar Shivraj Swami & B. Nethaji & Jyoti Prakash Sharma, 2022. "Determining Risk Factors that Diminish Asset Quality of Indian Commercial Banks," Global Business Review, International Management Institute, vol. 23(2), pages 372-384, April.
    2. Thomas Url, 2016. "Gesamtwirtschaftliche Auswirkungen der Exportgarantien in Österreich," WIFO Studies, WIFO, number 58839.

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