Dissecting the Effect of Credit Supply on Trade: Evidence from Matched Credit-Export Data

We estimate the elasticity of exports to credit using matched customs and firm-level bank credit data from Peru. To account for non-credit determinants of exports, we compare changes in exports of the same product and to the same destination by firms borrowing from banks differentially affected by capital-flow reversals during the 2008 financial crisis. We find that credit shocks affect the intensive margin of exports, but have no significant impact on entry or exit of firms to new product and destination markets. Our results suggest that credit shortages reduce exports through raising the variable cost of production, rather than the cost of financing sunk entry investments.

Dissecting the Effect of Credit Supply on Trade: Evidence from Matched Credit-Export Data

This paper presents evidence on the effect of credit supply shocks on exports. Capital flow reversals in Peru during the 2008 financial crisis induced a decline in the supply of credit by domestic banks with high share of foreign-currency denominated liabilities. We use this variation to estimate the elasticity of exports to bank credit. We use matched customs and firm-level bank credit data to control for non-credit related factors that may also affect the level of exports: we compare changes in exports of the same product and to the same destination by firms borrowing from different banks. Exports react strongly to changes in the supply of credit in the intensive margin, irrespectively of the firms' export volume. In the extensive margin, the negative credit supply shock increases the probability of exiting a product-destination export market, but does not significantly affect the number of firms entering an export market. The magnitude of the respective elasticities, as well as their heterogeneity across firm and export flow observable characteristics, are estimated.

Essays on banking and corporate finance

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2005.Includes bibliographical references.The first essay provides evidence that banks are liquidity constrained and hold private information about borrowers that hinders substitution of financing sources. Using loan level data from a public credit bureau and exploiting an exogenous shock to bank liquidity, I show that adverse selection prevents full arbitrage of profitable opportunities by competing lenders and thus liquidity constraints propagate to bank-dependent borrowers. The second essay evaluates a government program that targeted credit to small firms through existing financial intermediaries. Using the program eligibility rule to identify the effect on target firms, I find that target firms' total bank debt increased by 8 cents for every dollar of program financing provided to the banks. This effect is larger when the intermediary bank is more likely to lend to smaller firms according to observable bank characteristics. The third essay evaluates empirically the effect of credit history disclosure on the financial position of a sample of manufacturing firms in Argentina. Results indicate that credit history disclosure has a negative impact in the ability of firms to raise external finance when firms are exposed to a high liquidity risk.by Daniel Paravisini.Ph.D

Dissecting the effect of credit supply on trade: evidence from matched credit-export data

We estimate the elasticity of exports to credit using matched customs and firm-level bank credit data from Peru. To account for non-credit determinants of exports, we compare changes in exports of the same product and to the same destination by firms borrowing from banks differentially affected by capital-flow reversals during the 2008 financial crisis. We find that credit shocks affect the intensive margin of exports, but have no significant impact on entry or exit of firms to new product and destination markets. Our results suggest that credit shortages reduce exports through raising the variable cost of production, rather than the cost of financing sunk entry investments

Risk aversion and wealth: evidence from person-to-person lending portfolios

We estimate risk aversion from the actual financial decisions of 2,168 investors in Lending Club (LC), a person-to-person lending platform. We develop a methodology that allows us to estimate risk aversion parameters from each portfolio choice. Since the same individual makes repeated investments, we are able to construct a panel of risk aversion parameters that we use to disentangle heterogeneity in attitudes towards risk from the elasticity of investor-specific risk aversion to changes in wealth. In the cross section, we find that wealthier investors are more risk averse. Using changes in house prices as a source of variation, we find that investors become more risk averse after a negative wealth shock. These preferences consistently extrapolate to other investor decisions within LC

Specialization in bank lending: evidence from exporting firms

We develop an empirical approach for identifying specialization in bank lending using granular data on borrower activities. We illustrate the approach by characterizing bank specialization by export market, combining bank, loan, and export data for all firms in Peru. We find that all banks specialize in at least one export market, that specialization affects a firm’s choice of new lenders and how to finance exports, and that credit supply shocks disproportionately affect a firm’s exports to markets where the lender specializes in. Thus, bank market-specific specialization makes credit difficult to substitute, with consequences for competition in credit markets and the transmission of credit shocks to the econom

Specialization in bank lending: evidence from exporting firms

We develop a novel approach for measuring bank specialization using granular data on borrower activities and apply it to Peruvian exporters and their banks. We find that borrowers seek credit from banks that specialize in their export destinations,both when expanding exports and when exporting to new countries. Firms experiencing country-specific export demand shocks adjust borrowing disproportionately from specialized banks. Specialized bank credit supply shocks affect exports disproportionately to countries of specialization. Our results demonstrate that firm credit demand is bank- and activity-specific, which reduces banking competition and affects the transmission and amplification of shocks through the banking secto

Cultural proximity and loan outcomes

We present evidence that cultural proximity (shared codes, beliefs, ethnicity) between lenders and borrowers increases the quantity of credit and reduces default. We identify in-group lending using dyadic data on religion and caste for officers and borrowers from an Indian bank, and a rotation policy that induces exogenous matching between them. Having an in-group officer increases credit access and loan size dispersion, reduces collateral requirements, and induces better repayment even after the in-group officer leaves. We consider a range of explanations and suggest that the findings are most easily explained by cultural proximity serving to mitigate information frictions in lending

Dissecting the Effect of Credit Supply on Trade

We estimate the elasticity of exports to credit using matched customs and rm-level bank credit data from Peru. To account for non-credit determinants of exports, we compare changes in exports of the same product and to the same destination by firms borrowing from banks differentially affected by capital flow reversals during the 2008 financial crisis. A 10% decline in credit reduces by 2.3% the intensive margin of exports, by 3.6% the number of firms that continue supplying a product- destination, but has no effect on the entry margin. Overall, credit shortages explain 15% of the Peruvian exports decline during the crisis

Diseño institucional, estructura de incentivos y corrupción en hospitales públicos en Venezuela

Se estudia los determinantes de tres tipos de corrupción en hospitales públicos en Venezuela: el cobro de comisión en las compras de insumos, el hurto o sustracción de materiales y medicamentos, y el incumplimiento laboral (ausentismo) de los médicos y enfermeras. Los determinantes se establecen mediante los modelos tradicionales de crimen y teoría de agencia, basados en el cálculo del beneficio esperado del acto de corrupción. También se analiza la relación entre los elementos del diseño institucional y los determinantes de la corrupción, con especial énfasis en las variables que afectan la probabilidad de captura y sanción. Se encuentra evidencia de la existencia de cobro de comisión en los hospitales públicos, pero el modelo teórico no se comprueba empíricamente. Escasa o ninguna información sobre la existencia de cobro de comisiones en muchos hospitales de la muestra, y la posibilidad de colusión entre los principales y agentes responsables de las compras distorsionan los resultados. El nivel de hurto está relacionado positivamente con el beneficio potencial, y negativamente con el monto esperado de la pena y la probabilidad de captura. El hurto no está relacionado con el nivel de remuneración del personal. Las probabilidades de captura y sanción están asociadas a los controles y a la autonomía en el manejo del recurso humano por parte del director del hospital, respectivamente. El nivel de ausentismo está asociado empíricamente a la probabilidad de captura, el salario de eficiencia, la probabilidad de sanción y el monto de la pena. Los determinantes del incumplimiento laboral de los médicos y las enfermeras son distintos. Se comprueba una relación entre diseño institucional y la probabilidad de captura.