Trade and Credit Reallocation: How Banks Help Shape Comparative Advantage
Journal
Review of International Economics
Type
journal article
Date Issued
2021
Author(s)
Abstract (De)
Innovative production is driven by creative destruction. High turnover requires frequent reallocation of capital. Banks play a major role in capital reallocation by withdrawing funds from nonviable firms and redirecting credit to scale up the most productive firms. Structural parameters of the banking system thus affect a country’s comparative advantage in innovative sectors. Using a Heckscher–Ohlin model with banks, this paper shows how insolvency laws, investor protection, and bank capital regulation shape reallocation, specialization, and trade patterns.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
SEPS - Economic Policy
Refereed
Yes
Publisher
Wiley
Number
30(1)
Start page
282
End page
305
Subject(s)
Eprints ID
254608