This paper examines the impact of financial frictions on exports through trade intermediaries theoretically and empirically. I present a heterogeneous firm model of trade intermediation and financial ...frictions, in which firms require external finance for their trade costs. Since exporting through intermediaries entails lower fixed costs but higher variable costs, firms facing greater financial frictions are more likely to pursue intermediated trade. The model finds strong empirical support in rich data for indirect versus direct exporting at both the micro and macro levels. Micro-level data for over 9,000 firms in 115 countries reveals that financially more constrained firms are more likely to use trade intermediaries in exporting. Correspondingly, macro-level data of entrepôt trade through Hong Kong for 56 exporting countries shows that financially less developed countries are more likely to rely on trade intermediation. Both of these effects are stronger in financially more vulnerable industries and are not driven by other firm- and country-level determinants of exporting. These results have policy implications for the role of trade intermediaries in compensating for capital market frictions, in particular, as a means to enhance the gains from trade.
What determines the choice of countries' trade partners? We show theoretically and empirically that financial market imperfections affect the number and identity of exporters' destinations. Bigger ...economies with lower trade costs are more attractive markets because they offer higher export profits. This generates a pecking order of destinations such that firms serve all countries above a cut-off level of market potential. Credit constraints, however, raise this cut-off above the first best. Financially more advanced nations thus have more trade partners and go further down the pecking order, especially in sectors that rely heavily on the financial system. Our results provide new, systematic evidence that countries follow a hierarchy of export destinations, that market size and trade costs determine this hierarchy, and that financial frictions interact importantly with it. This has policy implications for the effects of cross-border linkages that depend on the number and identity of countries' trade partners.
•Financial frictions affect the number and identity of exporters' destinations.•Destination market potential rises with market size and falls with trade costs.•Financially developed nations export to more markets, go further down pecking order.•This effect is stronger in sectors that rely heavily on the financial system.
This paper studies cross‐border networks formed in firms' prior destinations in the context of cross‐border mergers and acquisitions (M&A). An acquirer owns a subsidiary in a prior destination, and ...the subsidiary's domestic network forms the cross‐border network of the acquirer due to their ownership link. We focus on the subsidiary's network of neighboring firms in a location within the prior destination. Using rich data on cross‐border M&A, we show that knowledge spillovers from this cross‐border network have a positive impact on the acquirer's likelihood of entering a new destination. Our results highlight the global externalities of multinationals' international economic activities.
This study examines whether a social annotation (SoAn) tool may help facilitate students' collaborative inquiry-based learning (CIL). This kind of SoAn tool enables students to bookmark, highlight, ...annotate, share, discuss, and collaborate on information sources collected for their collaborative inquiry-based learning assignments (CILA) online. An analysis of these interactions may help instructors understand how students learn and may provide useful advice to them during the learning processes. This study invited 377 freshmen or sophomores from three different general education courses at a Hong Kong university to try out a self-developed SoAn tool, the Web Annotation and Sharing Platform (WASP). Quantitative data were collected from a questionnaire survey, activity log files, and CILA marks, while qualitative data were collected from individual interviews. The survey revealed that WASP facilitated the early stages of students' CIL in identifying inquiry questions and searching information. Students agreed that the SoAn tool is useful and effective in facilitating their CIL, but there were no significant changes in their CILA marks. This study revealed that no correlation was found among students' perception of the CIL/SoAn tool, the usage of the SoAn tool, and their CILA marks. With students' high perceived usefulness and effectiveness of SoAn tools, further studies should focus on how to better utilise SoAn tools in students' CIL.
•Students perceive social annotation (SoAn) tool is useful and effective.•SoAn tool facilitated students' information collection and sharing in their group.•SoAn tool alone does not automatically facilitate students' collaborative learning.•Link up SoAn tools with Apps that students use help enhance collaborative learning.
Using data on Chinese outward direct investment and migrant stocks in 96 countries from 2003 to 2014, we find that migrant networks have a positive and significant impact on cross-border mergers and ...acquisitions (M&A), but not on greenfield investment. The migrant network effect is more pronounced for multinationals with less experience in the host country, especially for initial entrants that face greater firm, industry, and country-level information frictions. These results are robust to various estimation methods, including an instrumental variable approach that addresses potential endogeneity concerns. Our findings demonstrate the importance of knowledge spillovers from migrant networks to multinationals for facilitating entry into new markets.
Information frictions make foreign trade risky. In particular, the risk of buyer default deters firms from selling abroad. To address this issue, many countries offer export credit guarantees to ...provide insurance to exporters. In this paper, we investigate the causal effects of guarantees by exploiting a quasi-natural experiment in Sweden and rich register data on guarantees, firms and trade. Estimates from a fuzzy regression discontinuity design show large positive effects on the probability of exporting and the value of exports to the destination for which the guarantees are issued. These results are robust to an alternative approach using a difference-in-differences matching estimator. Further findings suggest that guarantees impact firms heterogeneously and play an important role in resolving buyer default risk and easing liquidity constraints. Larger impacts are observed in non-OECD countries, on smaller, liquidity constrained exporters and for firms selling products that face a relatively high cost of buyer default.
This paper examines strategic bargaining in a non‐cooperative game of tariff negotiation in the General Agreement on Tariffs and Trade (GATT). In the model, a country bargains sequentially and ...bilaterally with multiple trading partners under the MFN principle, making take‐it‐or‐leave‐it offers consisting of tariffs and transfers. A dynamic bargaining inefficiency arises in which the country strategically delays the reduction of its tariff until the final stage, and extensions to the model demonstrate gradual trade liberalization over multiple stages. Based on this idea of forward manipulation, the theory provides an explanation for gradualism in tariff reduction during the early GATT rounds.
Hypercortisolemia is one of the clinical features found in depressed patients. This clinical feature has been mimicked in animal studies via application of exogenous corticosterone (CORT). Previous ...studies suggested that CORT can induce behavioral disturbance in anxious-depressive like behavior, which is associated with suppressed neurogenesis. Hippocampal neurogenesis plays an important role in adult cognitive and behavioral regulation. Its suppression may thus lead to neuropsychiatric disorders. Similar to the effects of CORT on the animals' depression-like behaviors and neurogenesis, social deprivation has been regarded as one factor that predicts poor prognosis in depression. Furthermore, social isolation is regarded as a stressor to social animals including experimental rodents. Hence, this study aims to examine if social isolation would induce further emotional or anxiety-like behavior disturbance and suppress neurogenesis in an experimental model that was repeatedly treated with CORT. Sprague-Dawley rats were used in this study to determine the effects of different housing conditions, either social isolated or group housing, in vehicle-treated control and CORT-treated animals. Forced swimming test (FST), open field test (OFT) and social interaction test (SIT) were used to assess depression-like, anxiety-like and social behaviors respectively. Immunohistochemistry was performed to quantify the number of proliferative cells and immature neurons in the hippocampus, while dendritic maturation of immature neurons was analyzed by Sholl analysis. Social isolation reduced latency to immobility in FST. Furthermore, social isolation could significantly reduce the ratio of doublecortin and bromodeoxyuridine (BrdU) positive cells of the neurogenesis assay under CORT-treated condition. The current findings suggested that the behavioral and neurological effect of social isolation is dependent on the condition of hypercortisolemia. Furthermore, social isolation may possibly augment the signs and symptoms of depressed patients with potential alteration in neurogenesis.
The hypothalamic-pituitary-adrenal (HPA) and parasympathetic nervous systems have been reported to play important roles in emotion regulation and stress coping. Yet, their direct relationship with ...psychological resilience remains unclear. These biophysiological features should be considered together with the traditional psychometric properties in studying resilience more comprehensively. The current study aimed to examine the role of these systems during a laboratory stress task and to determine the prediction power of resilience by combining psychological and biophysiological features. One hundred and seven (52 females) university students without psychiatric disorders underwent the Trier Social Stress Task (TSST). Psychometric properties of resilience were measured at rest; vagal heart rate variability (HRV), salivary cortisol, and dehydroepiandrosterone (DHEA) levels were captured at baseline, during, and after TSST. Multivariate linear regression as well as support vector regression machine-learning analyses were performed to investigate significant predictors and the prediction power of resilience. Results showed that positive and negative affects, HRV during the anticipatory phase of stress, and the ratio of cortisol/DHEA at the first recovery time point were significant predictors of resilience. The addition of biophysiological features increased the prediction power of resilience by 1.2-fold compared to psychological features alone. Results from machine learning analyses further demonstrated that the increased prediction power of resilience by adding the ratio of cortisol/DHEA was significant in “cortisol responders”; whereas a trend level was observed in “cortisol non-responders”. Our findings extend the knowledge from the literature that high vagal activity during the anticipating phase of stress and the ability to restore the balance between cortisol and DHEA after a stress event could be an important feature in predicting resilience. Our findings also further support the need of combining psychological and biophysiological features in studying/predicting resilience.
•This study combined psychological and biophysiological features to study resilience.•High vagal activity during anticipation of stress associated with better resilience.•The ability to restore cortisol/DHEA ratio after a stress event impacted resilience.•Cortisol/DHEA increased prediction power of resilience in machine-learning analyses.
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