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Finance, Comparative Advantage, and Resource Allocation

Jaud, Melise ; Kukenova, Madina and Strieborny, Martin LU (2018) In Review of Finance 22(3). p.1011-1061
Abstract
Can financial institutions and markets enhance the discipline imposed by competitive product markets and thus improve resource allocation in the real economy? We address this question in the context of international trade, using disaggregated product-level data from 71 countries exporting to the USA. We show that exported products exit the US market sooner if they stand far away from the exporting country's comparative advantage. This pattern is stronger when the exporting country has a well-developed banking system, but it is unaffected by the depth of stock markets. These results are in accordance with theories stressing the disciplining role of debt and monitoring abilities of banks.
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author
; and
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
disciplining role of finance, export survival, product and financial markets, F11, G21, G30, O16
in
Review of Finance
volume
22
issue
3
pages
1011 - 1061
publisher
Oxford University Press
external identifiers
  • scopus:85048345281
ISSN
1572-3097
DOI
10.1093/rof/rfx047
language
English
LU publication?
yes
id
f1362ad5-4c54-4da7-8384-a1a2fe77afbd
date added to LUP
2017-11-10 16:54:16
date last changed
2025-04-04 15:08:19
@article{f1362ad5-4c54-4da7-8384-a1a2fe77afbd,
  abstract     = {{Can financial institutions and markets enhance the discipline imposed by competitive product markets and thus improve resource allocation in the real economy? We address this question in the context of international trade, using disaggregated product-level data from 71 countries exporting to the USA. We show that exported products exit the US market sooner if they stand far away from the exporting country's comparative advantage. This pattern is stronger when the exporting country has a well-developed banking system, but it is unaffected by the depth of stock markets. These results are in accordance with theories stressing the disciplining role of debt and monitoring abilities of banks.}},
  author       = {{Jaud, Melise and Kukenova, Madina and Strieborny, Martin}},
  issn         = {{1572-3097}},
  keywords     = {{disciplining role of finance; export survival; product and financial markets; F11; G21; G30; O16}},
  language     = {{eng}},
  month        = {{05}},
  number       = {{3}},
  pages        = {{1011--1061}},
  publisher    = {{Oxford University Press}},
  series       = {{Review of Finance}},
  title        = {{Finance, Comparative Advantage, and Resource Allocation}},
  url          = {{http://dx.doi.org/10.1093/rof/rfx047}},
  doi          = {{10.1093/rof/rfx047}},
  volume       = {{22}},
  year         = {{2018}},
}