Template-Type: ReDIF-Paper 1.0

Author-Name: Katharina Eck
Author-X-Name-First: Katharina 
Author-X-Name-Last: Eck

Author-Name: Martina Engemann
Author-X-Name-First: Martina 
Author-X-Name-Last: Engemann

Author-Name: Monika Schnitzer
Author-X-Name-First: Monika 
Author-X-Name-Last: Schnitzer

Title: How Trade Credits Foster International Trade
	
Abstract: Internationally active firms rely intensively on trade credits even though they are considered
particularly expensive. This phenomenon has been little explored so far. Our theoretical analysis shows that trade credits can alleviate financial constraints arising from asymmetric information because they serve as a quality signal and reduce the uncertainty
related to international transactions. We use unique survey data on German enterprises to test the effect of the use of trade credits on firms' exporting and importing behavior, both at the extensive and intensive margins. Our results support the
assertion that trade credits have a positive impact on firms' exporting and importing activities.

Length:  51 pages
Creation-Date:  2012-03
File-URL: http://www.bgpe.de/texte/DP/116_EckEngemannSchnitzer.pdf
File-Format: Application/pdf
File-Function: First version, 2012
Number: 116
Classification-JEL: F10, G30
Keywords: trade credits, international trade, financial constraints, export, import 
Handle: RePEc:bav:wpaper:116_EckEngemannSchnitzer