Trade and financial liberalization with asymmetric information in bank financing
We investigate trade and financial openness in a small developing country where entrepreneurs need bank financing to operate in an import-competing sector but banks do not observe their ability. This informational asymmetry causes adverse selection of low-ability individuals into entrepreneurship and also prevents poor but able individuals from being entrepreneurs. We find that trade opening improves national welfare, but a tax is needed on foreign financial capital. Trade opening reduces an income gap between the rich and the poor, while financial opening affects this income gap ambiguously.
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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 6 (2003)
Issue (Month): 2 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/GPRE19|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/GPRE19|
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.:
- Kletzer, Kenneth & Bardhan, Pranab, 1986.
"Credit Markets and Patterns of International Trade,"
Department of Economics, Working Paper Series
qt1g36f3sd, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Kletzer, Kenneth & Bardhan, Pranab, 1987. "Credit markets and patterns of international trade," Journal of Development Economics, Elsevier, vol. 27(1-2), pages 57-70, October.
- Kenneth Kletzer and Pranab Bardhan., 1986. "Credit Markets and Patterns of International Trade," Economics Working Papers 8612, University of California at Berkeley.
- Kyle Bagwell & R. Staiger, 1987.
"The Role of Export Subsidies When Product Quality is Unknown,"
758, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Bagwell, Kyle & Staiger, Robert W., 1989. "The role of export subsidies when product quality is unknown," Journal of International Economics, Elsevier, vol. 27(1-2), pages 69-89, August.
- Kyle Bagwell & Robert W. Staiger, 1988. "The Role Of Export Subsisies When Product Quality Is Unknown," NBER Working Papers 2584, National Bureau of Economic Research, Inc.
- Ben Bernanke & Mark Gertler, 1990.
"Financial Fragility and Economic Performance,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 105(1), pages 87-114.
- Avinash Dixit, 1989. "Trade and Insurance with Adverse Selection," Review of Economic Studies, Oxford University Press, vol. 56(2), pages 235-247.
- Flam, H. & Staiger, R.W., 1989.
"Adverse Selection In Credit Markets And Infant Industry Protection,"
432, Stockholm - International Economic Studies.
- Harry Flam & Robert W. Staiger, 1989. "Adverse Selection in Credit Markets and Infant Industry Protection," NBER Working Papers 2864, National Bureau of Economic Research, Inc.
- Grossman, Gene, 1999.
"Imperfect Labour Contracts and International Trade,"
CEPR Discussion Papers
2240, C.E.P.R. Discussion Papers.
- Grossman, G.M., 1998. "Imperfect Labour Contracts and International Trade," Papers 205, Princeton, Woodrow Wilson School - Public and International Affairs.
- Gene M. Grossman, 1999. "Imperfect Labor Contracts and International Trade," NBER Working Papers 6901, National Bureau of Economic Research, Inc.
- Gene M. Grossman & Henrik Horn, 1987.
"Infant-Industry Protection Reconsidered: The Case of Informational Barriers to Entry,"
NBER Working Papers
2159, National Bureau of Economic Research, Inc.
- Gene M. Grossman & Henrik Horn, 1988. "Infant-Industry Protection Reconsidered: The Case of Informational Barriers to Entry," The Quarterly Journal of Economics, Oxford University Press, vol. 103(4), pages 767-787.
- Gertler, Mark & Rogoff, Kenneth, 1990. "North-South lending and endogenous domestic capital market inefficiencies," Journal of Monetary Economics, Elsevier, vol. 26(2), pages 245-266, October.
- Bond, Eric W., 1986. "Entrepreneurial ability, income distribution, and international trade," Journal of International Economics, Elsevier, vol. 20(3-4), pages 343-356, May.
When requesting a correction, please mention this item's handle: RePEc:taf:jpolrf:v:6:y:2003:i:2:p:57-69. 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: (Michael McNulty)
If references are entirely missing, you can add them using this form.