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on International Activities of Firms |
| By: | Nicolás de Roux (Universidad de los Andes); Luis R. Martínez (Emory University); Camilo Tovar (International Monetary Fund); Jorge Tovar (Universidad de los Andes) |
| Abstract: | How do exporting firms navigate the loss of a major foreign market? This study examines the response of Colombian manufacturing firms to the collapse of trade with Venezuela, Colombia’s second largest trade partner. Trade disruptions began in 2009 when Venezuela restricted imports from Colombia and worsened with Venezuela’s protracted economic crisis after 2014, leading to a fall in trade of more than 90% by 2018. Using transaction-level customs data linked at the firm level to the Colombian manufacturing census, we use a difference-in-difference design based on previous exports to Venezuela to estimate the effect of the loss of this market on firm performance over a ten-year period. Our analysis yields four main findings: (i) affected firms experience a sharp and persistent decline in exports; (ii) while they survive, these firms significantly reduce their scale, lowering production, input use, investment, employment, and wages; (iii) however, traditional measures of total factor productivity remain unchanged, suggesting that firms retain their technical capabilities; (iv) affected firms adapt by increasing exports to familiar markets but fail to expand into new markets or boost domestic sales. These results highlight the resilience of exporting firms but also underscore the persistent difficulties in substituting a major trade partner. |
| Keywords: | Exports, Firm Performance, Manufacturing, Trade Collapse, Total Factor Productivity |
| JEL: | F13 F14 F61 O12 D22 D24 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:col:000089:021687 |
| By: | Arunima Paul; John Chung |
| Abstract: | Credit access plays a pivotal role in enabling firms to participate in global markets and support broader economic growth. While large firms benefit from steady revenue streams and easier financing options, small and medium-sized enterprises (SMEs) frequently encounter substantial challenges in securing credit. This paper analyzes U.S. metropolitan area–level data to assess how local expansions in credit supply, particularly via Community Reinvestment Act (CRA) loans, influence export performance. Using the geographic dispersion of bank headquarters as an instrumental variable, we estimate that a 10% increase in credit availability results in a 4.5% increase in export volumes. Extending the analysis to a heterogeneous firm framework with credit frictions, we show that a 10% reduction in trade costs produces welfare gains from trade that are 18.75% larger when firms are unconstrained by credit. |
| Keywords: | Credit access; Exports; SMEs; Community Reinvestment Act; Financial constraints; Trade; Welfare |
| JEL: | G21 F41 E44 F14 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:abn:wpaper:auwp2025-09 |
| By: | Mohammad Zeqi Yasin |
| Abstract: | Do industrial "superstars" help others up or crowd them out? We examine the relationship between the spillovers of superstar firms (those with the top market share in their industry) and the productivity dynamics in Indonesia. Employing data on Indonesian manufacturing firms from 2001 to 2015, we find that superstar exposures in the market raise both the productivity level and the growth of non-superstar firms through horizontal (within a sector-province) and vertical (across sectors) channels. When we distinguish by ownership, foreign superstars consistently encourage productivity except through the horizontal channel. In contrast, domestic superstars generate positive spillovers through both horizontal and vertical linkages, indicating that foreign firms do not solely drive positive externalities. Furthermore, despite overall productivity growth being positive in 2001-2015, the source of negative growth is mainly driven by within-group reallocation, evidence of misallocation among surviving firms, notably by domestic superstars. Although Indonesian superstar firms are more efficient in their operations, their relatively modest growth rates suggest a potential stagnation, which can be plausibly attributed to limited innovation activity or a slow pace of adopting new technologies. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.11139 |
| By: | Konrad Adler (University of St. Gallen - School of Finance; Swiss Finance Institute); JaeBin Ahn (International Monetary Fund (IMF)); Mai Dao (International Monetary Fund (IMF)) |
| Abstract: | We study how trade liberalization affects financial and innovation decisions of large firms across major G7 countries. We document how firms increase their cash holdings when their country's trading partners lower their import tariffs, while we find no effect of a decrease in the country's own import tariffs. Specifically, we find that the increase in cash holdings occurs before tariff cuts by trading partners and is associated with higher R&D spending and patent filing after the cuts. Our results are consistent with the predictions of a model in which higher expected returns to innovation from enhanced export market access lead to higher cash buffers. |
| Keywords: | Trade, MFN tariff, Cash Holdings, R&D, Patents |
| JEL: | F12 G31 O32 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp2571 |
| By: | María Alejandra Amado (BANCO DE ESPAÑA); Carlos Burga (PUC-CHILE); José E. Gutiérrez (BANCO DE ESPAÑA) |
| Abstract: | We document a novel channel through which domestic bank regulations generate cross-border real effects via international trade. Our setting is a one-time, unexpected increase in loan loss provisions in Spain in 2012. Using comprehensive administrative data from the Spanish credit register matched with customs data, we show that importers relying on the most affected banks experienced sharp reductions in credit supply, which led to a decline in their purchases abroad. Leveraging bilateral trade data at the country-product level, we find that Spanish aggregate imports declined, indicating limited reallocation across firms: the shock on highly exposed importers was not offset by the expansion from less exposed ones. This decline in Spain’s import demand is transmitted internationally, as total exports of Spain’s trading partners fell. The effect was stronger for countries with less developed financial systems, for exporters facing higher bilateral trade costs vis-à-vis Spain, and for products that are harder to reallocate across markets. Our findings highlight international trade as a key transmission mechanism of banking regulation –and domestic shocks more broadly– with implications for the cross-border coordination of prudential policy. |
| Keywords: | bank regulations, spillovers, international trade |
| JEL: | F14 F36 F42 G21 G28 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:bde:wpaper:2538 |