Working Paper

Financial Frictions and International Trade

Abstract: This paper reviews recent studies on the impact of financial frictions on international trade. We first present evidence on the relation between measures of access to external finance and export decisions. We then present an analytical framework to analyze the impact of financial frictions on firms' export decisions. Finally, we review recent applications of this framework to investigate the impact of financial frictions on international trade dynamics across firms, industries, and in the aggregate. We discuss related empirical, theoretical, and quantitative studies throughout.

Keywords: financial frictions; international trade; credit constraints; export decisions;

JEL Classification: F1; F4;

Status: Published in Oxford Research Encyclopedia, Economics and Finance

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Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Working Papers

Publication Date: 2021-07-08

Number: 2021-009

Note: Publisher DOI: