Are You Experienced? : Survival and Recovery of Trade Relations after Banking Crises / World Trade Organization.

Format:

Book

Government document

Author/Creator:

World Trade Organization.

Series:

WTO Working Papers, 25189808 ; no.2011/03.

WTO Working Papers, 25189808 ; no.2011/03

Language:

English

Subjects (All):

Economic research and trade policy analysis.

Local Subjects:

Economic research and trade policy analysis.

Physical Description:

1 online resource (28 pages).

Place of Publication:

Geneva : World Trade Organization, 2011.

System Details:

text file

Summary:

We examine the impact of banking crises on the duration of trade relations. We also investigate the effect of product-level characteristics, such as the size of exports and exporting experience, and of sector-level financial dependence variables, on the time to recover after a banking crisis. Using highly disaggregated US import data from 157 countries between 1996 and 2009, we first provide evidence that banking crises negatively affect the survival of trade relations. On average, the occurrence of a banking crisis decreases the rate of survival of trade relations by 13 percent. Moreover, we find that both the size of exports and exporting experience matter for recovery of trade relations after banking crises. Sectoral financial dependence has an experience-specific effect. Relations with more experience recover faster in financially dependent sectors. There is instead no clear evidence indicating effects of size heterogeneity, neither in financially dependent sectors nor in non-financially dependent ones. The results are robust and consistent across alternative econometric models.

Access Restriction:

Restricted for use by site license.