Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2013:13: Finance, Comparative Advantage, and Resource Allocation

Melise Jaud (), Madina Kukenova () and Martin Strieborny ()
Additional contact information
Melise Jaud: Paris School of Economics and World Bank
Madina Kukenova: University of Lausanne
Martin Strieborny: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden

Abstract: We show that exported products exit the US market sooner if they violate the Heckscher-Ohlin notion of comparative advantage. Crucially, this pattern is stronger when exporting country has a well-developed banking system, measured by a high ratio of bank credit over the GDP. Banks thus push firms away from exports that are facing an uphill battle on a competitive foreign market due to a suboptimal use of the domestic factor endowment. Our results imply a disciplining role for bank credit in terminating inefficient trade flows. This constitutes a new channel through which finance improves resource allocation in the real economy.

Keywords: resource misallocation; …nance; comparative advantage; export survival

JEL-codes: F11; G21; G30; O16

36 pages, April 22, 2013

Full text files 

WP13_13.pdf PDF-file

Download statistics

Questions (including download problems) about the papers in this series should be directed to David Edgerton ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2018-02-06 14:12:36.