Advanced Search
MyIDEAS: Login to save this paper or follow this series

Off the Cliff and Back? Credit Conditions and International Trade during the Global Financial Crisis

Contents:

Author Info

  • Davin Chor
  • Kalina Manova

Abstract

We study the collapse of international trade flows during the global financial crisis using detailed data on monthly US imports. We show that credit conditions were an important channel through which the crisis affected trade volumes, by exploiting the variation in the cost of capital across countries and over time, as well as the variation in financial vulnerability across sectors. Countries with higher interbank rates and thus tighter credit markets exported less to the US during the peak of the crisis. This effect was especially pronounced in sectors that require extensive external financing, have limited access to trade credit, or have few collateralizable assets. Exports of financially vulnerable industries were thus more sensitive to the cost of external capital than exports of less vulnerable industries, and this sensitivity rose during the financial crisis. The quantitative implications of our estimates for trade volumes highlight the large real effects of financial crises and the potential gains from policy intervention.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.nber.org/papers/w16174.pdf
Download Restriction: no

Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16174.

as in new window
Length:
Date of creation: Jul 2010
Date of revision:
Publication status: published as Chor, Davin & Manova, Kalina, 2012. "Off the cliff and back? Credit conditions and international trade during the global financial crisis," Journal of International Economics, Elsevier, vol. 87(1), pages 117-133.
Handle: RePEc:nbr:nberwo:16174

Note: IFM ITI
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Email:
Web page: http://www.nber.org
More information through EDIRC

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Jonathan Eaton & Sam Kortum & Brent Neiman & John Romalis, 2010. "Trade and the global recession," Working Paper Research, National Bank of Belgium 196, National Bank of Belgium.
  2. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output Per Worker Than Others?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(1), pages 83-116, February.
  3. Andrei A Levchenko & Logan T Lewis & Linda L Tesar, 2010. "The Collapse of International Trade during the 2008–09 Crisis: In Search of the Smoking Gun," IMF Economic Review, Palgrave Macmillan, Palgrave Macmillan, vol. 58(2), pages 214-253, December.
  4. Kristian Behrens & Giordano Mion, 2010. "Trade crisis? What trade crisis?," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 48910, London School of Economics and Political Science, LSE Library.
  5. Beck, Thorsten, 2001. "Financial development and international trade : is there a link?," Policy Research Working Paper Series, The World Bank 2608, The World Bank.
  6. Matías Braun & Borja Larrain, 2005. "Finance and the Business Cycle: International, Inter-Industry Evidence," Journal of Finance, American Finance Association, American Finance Association, vol. 60(3), pages 1097-1128, 06.
  7. Kroszner, Randall S. & Laeven, Luc & Klingebiel, Daniela, 2007. "Banking crises, financial dependence, and growth," Journal of Financial Economics, Elsevier, Elsevier, vol. 84(1), pages 187-228, April.
  8. Manova, Kalina, 2008. "Credit constraints, equity market liberalizations and international trade," Journal of International Economics, Elsevier, Elsevier, vol. 76(1), pages 33-47, September.
  9. Evenett Simon J, 2009. "What Can Be Learned From Crisis-Era Protectionism? An Initial Assessment," Business and Politics, De Gruyter, De Gruyter, vol. 11(3), pages 1-28, November.
  10. Haddad, Mona & Harrison, Ann & Hausman, Catherine, 2011. "Decomposing the great trade collapse : products, prices, and quantities in the 2008-2009 crisis," Policy Research Working Paper Series, The World Bank 5749, The World Bank.
  11. Kenneth Kletzer and Pranab Bardhan., 1986. "Credit Markets and Patterns of International Trade," Economics Working Papers, University of California at Berkeley 8612, University of California at Berkeley.
  12. Malouche, Mariem, 2009. "Trade and trade finance developments in 14 developing countries post September 2008 - a World Bank survey," Policy Research Working Paper Series, The World Bank 5138, The World Bank.
  13. Pol Antràs & Mihir A. Desai & C. Fritz Foley, 2007. "Multinational Firms, FDI Flows and Imperfect Capital Markets," NBER Working Papers, National Bureau of Economic Research, Inc 12855, National Bureau of Economic Research, Inc.
  14. Francesco Caselli, 2004. "Accounting for Cross-Country Income Differences," NBER Working Papers, National Bureau of Economic Research, Inc 10828, National Bureau of Economic Research, Inc.
  15. Nicolas Berman and Philippe Martin, 2010. "The Vulnerability Of Sub-Saharan Africa To The Financial Crisis: The Case Of Trade," EUI-RSCAS Working Papers, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS) 15, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
  16. Thorsten Beck, 2003. "Financial Dependence and International Trade," Review of International Economics, Wiley Blackwell, Wiley Blackwell, vol. 11(2), pages 296-316, 05.
  17. Minetti, Raoul & Zhu, Susan Chun, 2011. "Credit constraints and firm export: Microeconomic evidence from Italy," Journal of International Economics, Elsevier, Elsevier, vol. 83(2), pages 109-125, March.
  18. Freund, Caroline, 2009. "The trade response to global downturns : historical evidence," Policy Research Working Paper Series, The World Bank 5015, The World Bank.
  19. Do, Quy-Toan & Levchenko, Andrei A., 2007. "Comparative advantage, demand for external finance, and financial development," Journal of Financial Economics, Elsevier, Elsevier, vol. 86(3), pages 796-834, December.
  20. Mary Amiti & David E. Weinstein, 2009. "Exports and Financial Shocks," NBER Working Papers, National Bureau of Economic Research, Inc 15556, National Bureau of Economic Research, Inc.
  21. Stijn Claessens & Luc Laeven, 2003. "Financial Development, Property Rights, and Growth," Journal of Finance, American Finance Association, American Finance Association, vol. 58(6), pages 2401-2436, December.
  22. Raddatz, Claudio, 2003. "Liquidity needs and vulnerability to financial udnerdevelopment," Policy Research Working Paper Series, The World Bank 3161, The World Bank.
  23. Kalina Manova, 2008. "Credit Constraints, Heterogeneous Firms, and International Trade," NBER Working Papers, National Bureau of Economic Research, Inc 14531, National Bureau of Economic Research, Inc.
  24. Raghuram G. Rajan & Luigi Zingales, . "Financial Dependence and Growth," CRSP working papers, Center for Research in Security Prices, Graduate School of Business, University of Chicago 344, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
  25. McKibbin, Warwick J. & Stoeckel, Andrew, 2009. "The potential impact of the global financial crisis on world trade," Policy Research Working Paper Series, The World Bank 5134, The World Bank.
  26. Ellingsen, Tore & Vlachos, Jonas, 2009. "Trade finance in a liquidity crisis," Policy Research Working Paper Series, The World Bank 5136, The World Bank.
  27. Chauffour, Jean-Pierre & Farole, Thomas, 2009. "Trade finance in crisis : market adjustment or market failure ?," Policy Research Working Paper Series, The World Bank 5003, The World Bank.
  28. George Alessandria & Joseph P. Kaboski & Virgiliu Midrigan, 2010. "The great trade collapse of 2008-2009: an inventory adjustment?," Working Papers, Federal Reserve Bank of Philadelphia 10-18, Federal Reserve Bank of Philadelphia.
  29. Simeon Djankov & Caroline Freund & Cong S. Pham, 2010. "Trading on Time," The Review of Economics and Statistics, MIT Press, MIT Press, vol. 92(1), pages 166-173, February.
  30. Giordano Mion, 2011. "Trade crisis - what trade crisis?," CentrePiece - The Magazine for Economic Performance, Centre for Economic Performance, LSE 336, Centre for Economic Performance, LSE.
  31. Fisman, Raymond & Love, Inessa, 2001. "Trade credit, financial intermediary development, and industry growth," Policy Research Working Paper Series, The World Bank 2695, The World Bank.
  32. Andrei A. Levchenko & Logan T. Lewis & Linda L. Tesar, 2010. "The Collapse of International Trade During the 2008-2009 Crisis: In Search of the Smoking Gun," NBER Working Papers, National Bureau of Economic Research, Inc 16006, National Bureau of Economic Research, Inc.
  33. Ingo Borchert & Aaditya Mattoo, 2009. "The crisis-resilience of services trade," The Service Industries Journal, Taylor & Francis Journals, Taylor & Francis Journals, vol. 30(13), pages 2115-2136, August.
  34. Jiandong Ju & Shang-Jin Wei, 2008. "When Is Quality of Financial System a Source of Comparative Advantage?," NBER Working Papers, National Bureau of Economic Research, Inc 13984, National Bureau of Economic Research, Inc.
  35. Murillo Campello & John Graham & Campbell R. Harvey, 2009. "The Real Effects of Financial Constraints: Evidence from a Financial Crisis," NBER Working Papers, National Bureau of Economic Research, Inc 15552, National Bureau of Economic Research, Inc.
  36. Oecd, 2007. "Update on Financial Market Developments," Financial Market Trends, OECD Publishing, OECD Publishing, vol. 2007(1), pages 23-33.
  37. Dell''Ariccia, Giovanni & Detragiache, Enrica & Rajan, Raghuram G, 2005. "The Real Effect of Banking Crises," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5088, C.E.P.R. Discussion Papers.
  38. Thomas Chaney, 2013. "Liquidity Constrained Exporters," NBER Working Papers, National Bureau of Economic Research, Inc 19170, National Bureau of Economic Research, Inc.
  39. Kiminori Matsuyama, 2004. "Credit Market Imperfections and Patterns of International Trade and Capital Flows," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1389, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  40. Bricongne, Jean-Charles & Fontagné, Lionel & Gaulier, Guillaume & Taglioni, Daria & Vicard, Vincent, 2012. "Firms and the global crisis: French exports in the turmoil," Journal of International Economics, Elsevier, Elsevier, vol. 87(1), pages 134-146.
  41. Markus K. Brunnermeier, 2009. "Deciphering the Liquidity and Credit Crunch 2007-2008," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 23(1), pages 77-100, Winter.
  42. George Alessandria & Joseph P. Kaboski & Virgiliu Midrigan, 2010. "The Great Trade Collapse of 2008-09: An Inventory Adjustment?," NBER Working Papers, National Bureau of Economic Research, Inc 16059, National Bureau of Economic Research, Inc.
  43. Greenaway, David & Guariglia, Alessandra & Kneller, Richard, 2007. "Financial factors and exporting decisions," Journal of International Economics, Elsevier, Elsevier, vol. 73(2), pages 377-395, November.
  44. Svaleryd, Helena & Vlachos, Jonas, 2005. "Financial markets, the pattern of industrial specialization and comparative advantage: Evidence from OECD countries," European Economic Review, Elsevier, Elsevier, vol. 49(1), pages 113-144, January.
  45. Hiau Looi Kee & Cristina Neagu & Alessandro Nicita, 2013. "Is Protectionism on the Rise? Assessing National Trade Policies during the Crisis of 2008," The Review of Economics and Statistics, MIT Press, MIT Press, vol. 95(1), pages 342-346, March.
  46. Kalina Manova & Shang-Jin Wei & Zhiwei Zhang, 2011. "Firm Exports and Multinational Activity Under Credit Constraints," NBER Working Papers, National Bureau of Economic Research, Inc 16905, National Bureau of Economic Research, Inc.
  47. Iacovone, Leonardo & Zavacka, Veronika, 2009. "Banking crises and exports : lessons from the past," Policy Research Working Paper Series, The World Bank 5016, The World Bank.
  48. John Romalis, 2004. "Factor Proportions and the Structure of Commodity Trade," American Economic Review, American Economic Association, American Economic Association, vol. 94(1), pages 67-97, March.
  49. Robert C. Feenstra & John Romalis & Peter K. Schott, 2002. "U.S. Imports, Exports, and Tariff Data, 1989-2001," NBER Working Papers, National Bureau of Economic Research, Inc 9387, National Bureau of Economic Research, Inc.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:16174. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.