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A Credit Crunch Behind the Great Trade Collapse? Micro Evidence From Europe

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  • Giovanni Ferri

    (LUMSA University)

  • Pierluigi Murro

    (LUMSA University)

Abstract

Using a very detailed sample of small and medium European firms, we study how differences in main banks’ lending technology affected the foreign activities in the aftermath of the financial crisis. We find that the probability of a reduction in foreign activities was lower for firms matching with relational banks. The positive impact of relationship lending is especially strong for younger and smaller firms and for firms in industries more reliant on external finance. In addition, we uncover that relationship lending is beneficial for firms that are in the early stage of internationalization.

Suggested Citation

  • Giovanni Ferri & Pierluigi Murro, 2016. "A Credit Crunch Behind the Great Trade Collapse? Micro Evidence From Europe," CERBE Working Papers wpC10, CERBE Center for Relationship Banking and Economics.
    • Handle: RePEc:lsa:wpaper:wpc10
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    Cited by:

    1. van Bergeijk, P.A.G., 2015. "The heterogeneity of world trade collapses," ISS Working Papers - General Series 606, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.

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    More about this item

    Keywords

    Bank-Firm Relationships; Lending Technologies; Trade.;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • F10 - International Economics - - Trade - - - General

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