Trade and Credit Reallocation: How Banks Help Shape Comparative Advantage

Item Type Journal paper
Abstract 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.
Authors Keuschnigg, Christian & Kogler, Michael
Journal or Publication Title Review of International Economics
Language English
Subjects economics
HSG Classification contribution to scientific community
HSG Profile Area SEPS - Economic Policy
Refereed Yes
Date 2021
Publisher Wiley
Number 30(1)
Page Range 282-305
Publisher DOI
Official URL
Depositing User Dr. Mirela Keuschnigg
Date Deposited 05 Jul 2018 09:32
Last Modified 03 Aug 2022 09:18


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Keuschnigg, Christian & Kogler, Michael (2021) Trade and Credit Reallocation: How Banks Help Shape Comparative Advantage. Review of International Economics, (30(1)). 282-305.

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