Subnational Patterns of Exports, Banking, and Trade Costs

Vavrus, Joseph Edward Archibald

Graduate Thesis Or Dissertation

Subnational Patterns of Exports, Banking, and Trade Costs Public Deposited

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Citeable URL: https://scholar.colorado.edu/concern/graduate_thesis_or_dissertations/8623hx730

Abstract

In my first chapter, I investigate how local access to credit affects large-scale firm outcomes like exporting. I answer this question by modeling the relationship between finance-constrained exporters and bank entry decisions. This generates bilateral trade equations where local access to banking increases the intensive and extensive margin of exporting. I estimate this model with a panel of Brazilian municipal-level trade and banking data and show that commercial bank presence per person increases bilateral exports.In my second chapter, I analyze the geography of bank company branching decisions and their effect on access to finance. I focus on three essential aspects of this unit of analysis: financial products are largely homogeneous, yet banks still enjoy significant market power, many companies build multiple branches in a single market, and those markets are often geographically distant from the bank company's headquarters. I capture these effects by building a model of heterogeneously productive banks that compete for the share of monopolistic profits by building bank branches. This paper shows that the effects of within-country geography on bank company behavior can help explain endogenous financial development.For my final chapter, I look at economies of scale in shipping and patterns of subnational trade. I show that intranational trade between regions in goods destined for consumption in the U.S. is increasing in shipments destined for foreign markets. Ignoring this relationship means means that traditional trade flow estimates will overstate the effect of distance on trade.

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