Testing the Trade Credit and Trade Link: Evidence from Data on Export Credit Insurance

26 Pages Posted: 8 Mar 2013

See all articles by Marc Auboin

Marc Auboin

World Trade Organization (WTO)

Martina Engemann

University of Munich/LMU

Multiple version iconThere are 2 versions of this paper

Date Written: February 2013

Abstract

Trade finance has received special attention during the financial crisis as one of the potential culprits for the great trade collapse. Several researchers have used micro level data to establish the link between trade finance and trade, especially so during the financial crisis, and have found diverting results. This paper analyses the effect of trade credit on trade on a macro level through a whole cycle. We employ Berne Union data on export credit insurance, the most extensive dataset on trade credits available at the moment, for the period of 2005-2011. Using an instrumentation strategy we can identify a significantly positive effect of insured trade credit, as a proxy for trade credits, on trade. The effect of insured trade credit on trade is very strong and remains stable over the cycle, not varying between crisis and non-crisis periods.

Keywords: trade credit, financial crisis, import estimation

JEL Classification: F13, F34, G21, G23

Suggested Citation

Auboin, Marc and Engemann, Martina, Testing the Trade Credit and Trade Link: Evidence from Data on Export Credit Insurance (February 2013). Available at SSRN: https://ssrn.com/abstract=2229249 or http://dx.doi.org/10.2139/ssrn.2229249

Marc Auboin (Contact Author)

World Trade Organization (WTO) ( email )

Rue de Lausanne 154
Geneva 21, CH-1211
Switzerland

Martina Engemann

University of Munich/LMU ( email )

Akadmiestrasse 1
Munich, 80799
Germany

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