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Financing time to trade : Evidence from French firms

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  • Pauline Bourgeon

    ()
    (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris 1 - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, Banque de France - -)

  • Jean-Charles Bricongne

    ()
    (Banque de France - -)

  • Guillaume Gaulier

    ()
    (Banque de France - -)

Abstract

Using a very detailed set of French firms' data on trade flows and balance sheets, this paper analyses to what extent firms' financial frictions, considered as the interaction of financial dependence and financial constraints, and trading time affect their trade flows. In this empirical study the main indicator taken for firm's financial constraint, namely payment incident occurring at firm's partner is exogenous, whereas "traditional" financial indicators in other studies are not. The notion of trading time encompasses the whole time-lag between the production of export goods and the receiving of the revenues generated by these exports (time in transit, time at borders, etc.). In estimations, we both use distance as a proxy and a precise indicator computed by adding shipping time and average time spent at borders (only available for a sub-sample of extra-EU countries). The empirical results obtained so bring evidence that trading time amplifies the negative effect of financial restrictions on trade. By computing the marginal effect of financial constraint over bilateral trade we confirm that it represents a significant barrier to export for destinations beyond 3500 kilometers away.

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Bibliographic Info

Paper provided by HAL in its series Post-Print with number halshs-00677343.

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Date of creation: Mar 2012
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Handle: RePEc:hal:journl:halshs-00677343

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Related research

Keywords: Distance interaction; financial frictions; gravity equations; trade patterns; trading time.;

References

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  1. Joel Stiebale, 2008. "Do Financial Constraints Matter for Foreign Market Entry? – A Firm-Level Examination," Ruhr Economic Papers 0051, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  2. James Harrigan & Carolyn Evans, 2004. "Distance, Time and Specialization," Econometric Society 2004 North American Winter Meetings 640, Econometric Society.
  3. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
  4. Vlad Manole & Mariana Spatareanu, 2009. "Exporting, Capital Investment and Financial Constraints," Working Papers Rutgers University, Newark 2009-005, Department of Economics, Rutgers University, Newark.
  5. Nicolas Berman & José de Sousa & Thierry Mayer & Philippe Martin, 2013. "Time to ship during Financial Crisis," Sciences Po Economics Discussion Papers 2013-14, Sciences Po Departement of Economics.
  6. Daniel Paravisini & Veronica Rappoport & Philipp Schnabl & Daniel Wolfenzon, 2011. "Dissecting the Effect of Credit Supply on Trade: Evidence from Matched Credit-Export Data," NBER Working Papers 16975, National Bureau of Economic Research, Inc.
  7. Mariassunta Giannetti & Mike Burkart & Tore Ellingsen, 0. "What You Sell Is What You Lend? Explaining Trade Credit Contracts," Review of Financial Studies, Society for Financial Studies, vol. 24(4), pages 1261-1298.
  8. Kalina Manova, 2008. "Credit Constraints, Heterogeneous Firms, and International Trade," NBER Working Papers 14531, National Bureau of Economic Research, Inc.
  9. Campa, Jose M. & Shaver, J. Myles, 2002. "Exporting and capital investment: On the strategic behavior of exporters," IESE Research Papers D/469, IESE Business School.
  10. Emanuele Forlani, 2010. "Liquidity Constraints and Firm’s Export Activity," Development Working Papers 291, Centro Studi Luca d\'Agliano, University of Milano, revised 30 Apr 2010.
  11. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
  12. David Hummels & Georg Schaur, 2012. "Time as a Trade Barrier," NBER Working Papers 17758, National Bureau of Economic Research, Inc.
  13. Thierry Mayer & Gianmarco Ottaviano, 2008. "The Happy Few: The Internationalisation of European Firms," Intereconomics: Review of European Economic Policy, Springer, vol. 43(3), pages 135-148, May.
  14. Minetti, Raoul & Zhu, Susan Chun, 2011. "Credit constraints and firm export: Microeconomic evidence from Italy," Journal of International Economics, Elsevier, vol. 83(2), pages 109-125, March.
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