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Financial Crises and Emerging Market Trade

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  • Mr. Alun H. Thomas

Abstract

This chapter discusses various aspects of financial crises and emerging market trade. The current global financial crisis and the sharp reduction in trade flows have raised questions about the extent to which access to capital affects the ability of companies to produce and sell exports and to buy imports. The results presented in this chapter imply that financial conditions play a significant, however, not dominant role in stimulating trade volumes among emerging market countries. Estimates presented in this paper suggest that the combination of zero net private capital flows to emerging markets and a domestic banking crisis could lower import volume growth by between 5 and 6 percent on impact, with a slightly lower effect on export volumes. It is also important to recognize that trade finance is not the only form of credit with implications for trade volumes. Conditions in credit markets more generally, including for working capital and long-term investment financing also have an impact on international trade, including through their impact on industrial production more generally. As such, it is probably sensible for policymakers to support credit flows in general rather than to focus specifically on increasing trade finance.

Suggested Citation

  • Mr. Alun H. Thomas, 2009. "Financial Crises and Emerging Market Trade," IMF Staff Position Notes 2009/004, International Monetary Fund.
    • Handle: RePEc:imf:imfspn:2009/004
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    Citations

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    Cited by:

    1. Peter A.G. Van Bergeijk, 2009. "Expected Extent and Potential Duration of the World Import Crunch," Kyklos, Wiley Blackwell, vol. 62(4), pages 479-487, November.
    2. Georgescu, George, 2012. "Impactul crizei globale asupra structurii comerţului exterior al României [The Global Crisis Impact on Romanian Trade Structure]," MPRA Paper 36339, University Library of Munich, Germany.
    3. Hussin Abdullah & Jauhari Dahalan & Khaw Lee Hwei & Mohammed Umar & Md Mohan Uddin, 2017. "Malaysian Financial Stress Index and Assessing its Impacts on the Economy," International Journal of Economics and Financial Issues, Econjournals, vol. 7(2), pages 227-235.
    4. Georgescu, George, 2013. "România în perioada post-criză: investiţiile străine directe şi efecte asupra echilibrului financiar extern [Romania in post-crisis period: foreign direct investments and effects on external financ," MPRA Paper 46531, University Library of Munich, Germany.
    5. Cevik, Emrah Ismail & Dibooglu, Sel & Kutan, Ali M., 2013. "Measuring financial stress in transition economies," Journal of Financial Stability, Elsevier, vol. 9(4), pages 597-611.
    6. Adrian Saville & Marcel Kohler, 2011. "Measuring the Impact of Trade Finance on South African Export Flows," Working Papers 232, Economic Research Southern Africa.
    7. Cevik, Emrah Ismail & Dibooglu, Sel & Kenc, Turalay, 2013. "Measuring financial stress in Turkey," Journal of Policy Modeling, Elsevier, vol. 35(2), pages 370-383.
    8. Nuetah, J. Alexander & Xin, Xian & Zuo, Ting, 2010. "Does Trade Liberalization Make the Poor Better Off? Sub-Saharan Africa and the Doha Agricultural Trade Reform," Conference papers 331991, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    9. Ercan Uygur, 2010. "The Global Crisis And The Turkish Economy," Working Papers 2010/3, Turkish Economic Association.

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