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Destination Trade Credit and Exports: Evidence from Cross Country Panel Data

Author

Listed:
  • Changyuan Luo

    (Institute of World Economy, Fudan University, CHINA)

  • Shuai Zeng

    (School of Economics, Fudan University, CHINA)

  • Laixun Zhao

    (Research Institute for Economics and Business Administration, Kobe University, JAPAN)

Abstract

We examine the impact of destination trade credit (DTC) on exports, using cross-country panel data for 2000-2018 and focusing on financing by foreign trade partners. We find DTC promotes a country's exports disproportionately more in liquidity-dependent industries, a consistent result after addressing endogeneity and various robustness tests. DTC mainly promotes trade by increasing export quantity, while lowering export prices and export varieties. Further, the effect is greater if the level of financial development of the source country is lower, but smaller if the product complexity of industries becomes higher. During the 2008 global financial crisis, DTC also contributes to export expansion, but the effect is relatively small.

Suggested Citation

  • Changyuan Luo & Shuai Zeng & Laixun Zhao, 2023. "Destination Trade Credit and Exports: Evidence from Cross Country Panel Data," Discussion Paper Series DP2023-15, Research Institute for Economics & Business Administration, Kobe University.
    • Handle: RePEc:kob:dpaper:dp2023-15
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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2023-15.pdf
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    References listed on IDEAS

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    1. Ngoc Thang Doan & Thanh Ha Le, 2024. "On the relationship between trade credit and export survival," International Economics and Economic Policy, Springer, vol. 21(2), pages 363-383, May.

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    More about this item

    Keywords

    Informal finance; Destination trade credit; Exports; Cash in advance; Deferred payment;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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