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dc.titleBank Loans, Trade Credit and Export Prices: Evidence from Exchange Rate Shocks in China
dc.contributor.authorCui, Jingyuan George
dc.contributor.authorGuo, Xiaosheng
dc.contributor.authorJuarez, Leticia
dc.contributor.orgunitDepartment of Research and Chief Economist
dc.coverageChina
dc.date.available2024-06-13T00:06:00
dc.date.issue2024-06-13T00:06:00
dc.description.abstractThis study investigates exchange rate pass-through (ERPT) to international prices in the context of trade credit usage. Utilizing a comprehensive dataset including customs transactions and balance sheet data of Chinese exporters during 2000-2011, we document several stylized facts. First, there exists a significant dampening effect on the sensitivity of international pricing to exchange rate fluctuations among exporters that extend substantial trade credit, indicating a more complete ERPT. Second, the interest payments made by exporters to domestic banks exhibit negative responsiveness to home currency depreciation. Third, we observe substantial complementarity between trade credit and bank loans. To explain these patterns, we introduce a theoretical model featuring trade credits, bank lending and exchange rate shocks. Our findings underscore the importance of considering the financial health of firms in policy formulation, particularly in strategies aimed at managing inflation through supply chains.
dc.format.extent28
dc.identifier.doihttp://dx.doi.org/10.18235/0013020
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/Bank-Loans-Trade-Credit-and-Export-Prices-Evidence-from-Exchange-Rate-Shocks-in-China.pdf
dc.language.isoen
dc.publisherInter-American Development Bank
dc.subjectExchange Rate
dc.subjectExport Activity
dc.subjectTrade Credit
dc.subjectFinancial Constraint
dc.subjectSmall Business
dc.subjectExport
dc.subjectBank Loan
dc.subjectInterest Rate
dc.subjectForest Resource
dc.subject.jelcodeF31 - Foreign Exchange
dc.subject.jelcodeF34 - International Lending and Debt Problems
dc.subject.jelcodeG32 - Financing Policy • Financial Risk and Risk Management • Capital and Ownership Structure • Value of Firms • Goodwill
dc.subject.keywordsExchange rate pass-through;Trade credit;Financial constraints
idb.identifier.pubnumberIDB-DP-01060
idb.operationRG-K1098
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