Essays In The International Economics Of Credit And Banking

Author : Hannah Claire Gabriel
Publisher :
ISBN 13 :
Total Pages : 114 pages
Book Rating : 4.6/5 (647 download)

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Download or read book Three Essays in International Economics written by Hannah Claire Gabriel and published by . This book was released on 2020 with total page 114 pages. Available in PDF, EPUB and Kindle. Book excerpt: Chapter 1: This paper contributes to a growing literature on the effects of credit constraints on international trade, and an existing body of literature on the exporting advantage of multinational firms. Using 2013 data from Estonian and Hungarian exporting firms, I find that traditional measures of credit constraints (cash flows, debt to sales ratio, and tangible asset share) have a significant negative effect on the intensive margin of international trade, and being a multinational affiliate has a positive effect on trade. Multinational affiliates export nearly twice as much as domestic firms. I find no strong evidence that multinational affiliates are less credit constrained than domestic firms conditional on firms already exporting. Therefore, any differences between the two types of firms appear on the extensive margin of trade or in domestic activities. Estonia and Hungary are relatively recent EU members that experienced an influx of foreign investment during their transition periods in the 1990s. Therefore, these results provide useful information for studying the long-term benefits of EU accession and foreign investment in transition economies.Chapter 2: This paper analyzes the impact of multinational banking and multinational ownership on the performance of exporting Central European firms. Using a panel of Hungarian, Croatian, and Estonian exporters, I find that controlling for a firm's borrowing behavior leads to a 12.5% reduction in the coefficient on multinational status. Such a non-trivial amount indicates that the "multinational advantage" in export revenue falls from 122% to 102%. This outcome is strongest for Hungarian firms and weakest for Croatian firms, indicating a long-run benefit to increases in foreign banking among recent EU members. Additionally, I find that the Hungarian government's effort to increase domestic banking presence by purchasing two major multinational banks, MKB and Budapest Bank, led to a $270,000 decrease in loans among domestically owned exporters. However, this purchase had no effect on the loans of multinational affiliates. These results provide evidence that multinational affiliates are better able to smooth their borrowing behavior in the presence of a tumultuous banking sector, and that the firms most affected by anti-global banking policies are smaller, locally owned firms. Chapter 3: In 2014, the Austrian bank Hypo Group Alpe Adria went bankrupt and was purchased and rebranded as Addiko bank. The bank was purchased by the American banking group Advent International, and the European Bank for Reconstruction and Development (EBRD), an international organization that serves as an investment bank in former transition economies. Their primary goal is to assist European transition countries in establishing or enriching a market-based economy. In this paper, I explore how this "bailout" of Addiko Bank by an international organization affected exporting firms in Croatia. Specifically, I investigate whether there was a positive effect on firm performance, therefore justifying the need for intervention by an international financial institution. I find that the turnover of Addiko bank led to a $260,000 decrease in loans taken out by firms. However, this effect seems to occur immediately after the turnover, and vanishes over time. Additionally, I find no effect on the export revenue, and total revenue of firms, and a small increase in the domestic revenue amongst the firms. These results indicate that after an initial period of turmoil, the intervention by EBRD and Advent International had no lasting negative (and perhaps slightly positive) effects on firm outcomes.