The competitive advantage of firms and their proximity to export finance centers,
Arnold, Edward John
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This dissertation examines the impact of a firm's proximity to a trade finance center on its export success. The primary focus is on firms that have taken advantage of financing from the Export Import Bank of the United States (Ex-Im Bank). The central proposition behind the dissertation is that firms that are located closer to trade finance centers are more likely to use trade finance products than those that are more remote, and that firms that use trade financing are more successful exporters. Related data regarding the diffusion of information pertaining to trade finance products, the importance of face-to-face meetings in trade finance, and the impact of transaction size on the proximity/usage relationship are also investigated. The data for the dissertation comes from information on US exporters that obtained Ex-Im Bank financing in 2005, and from surveys taken from exporters that used Ex-Im Bank financing and exporters that had not. A number of important findings are uncovered that should be of interest to both economic geographers and policy makers. First, by mapping out trade finance transactions and comparing the results with population statistics, it appears that firms located close to trade finance centers are more likely to take advantage to trade finance products. Second, by comparing surveys of firms that use Ex-Im Bank financing and firms that do not, we see that firms that have used export financing are much more successful exporters. A third finding is that face-to-face meetings are very important to both disseminating information on trade financing and in the establishment of the financing facility. A surprising finding is that transaction size has a negligible impact on a firm's proximity to finance centers. It would seem reasonable to expect that banks would travel further from the trade finance center to service larger transactions. However, the results show that transaction size has little to no impact. Finally, it seems that firms that used Ex-Im Bank financing not only have higher export intensities but they were are also more experienced exporters, have been in business longer, and were more likely to have used other sophisticated trade finance tools than firms that had not used Ex-Im financing.