Resumen de Trade finance in historical perspective: the role of German banks in the rise of Germany as international trade power, 1875 - 1913
This work studies the nexus of German banking and foreign trade development in the late nineteenth and early twentieth centuries. It is designed and structured as three independent but interrelated articles.
The first article analyses and compares the role of foreign banks in the German and British world trade dynamics between 1880 and 1913. Empirical and qualitative research alike show that German banks played a pivotal role in the industrialization in nineteenth century Germany. By the end of the century, Germany started to expand its foreign commercial relations intensively, challenging the major player in the international trade markets at that time; Great Britain. The study argues that the German foreign banks were key factors in the dynamics of German trade expansion, and moreover played a more pivotal role in the establishment of external trade than the British banks. Creating a completely new data set on German and British bilateral trade and foreign banks on a global scale between 1881 and 1913, it analyzes and compares the development of international commerce and finance of the two nations. Furthermore, using an augmented gravity model of trade, it empirically studies the nexus of German and British world exports and geographic banking penetration. The results suggest a positive and significant correlation between the number of German banks in and exports to a country. In particular, the impact of bank presence seems to be more significant in 1881 than in 1913, affirming the central idea of banks as initiators of trade. In contrast, the results do not confirm such a relation between British foreign bank and export development.
The second article analyses the effect of German bank entry on German exports to Argentina between 1875 and 1914. In the late 1870s Germany started to intensively expand its foreign commercial relations, challenging the British hegemony in international trade markets. Principal trade destinations of both nations were the emerging markets of Latin America, with Argentina being one of the leading and fastest growing economies. This study argues that in particular German industries with a close relationship to German banks in Argentina benefited from the support of these banks, and hence exported more than other German industries. I create a novel dataset containing disaggregated Argentinian imports and the connections between German banks in Argentina and German export companies for the period 1875 - 1914. I empirically examine the determinants of exports of Argentina´s trade partners and tests for the effect of bank entry. The results show that export success of a country is mainly explained by a higher degree of productivity together with an increase in the intensive margins of export. Most importantly, the results affirm the central idea of a positive impact of German bank entry on exports, in particular on industries linked to the bank.
Finally, the third article studies how the establishment of German banks eased the credit constraints of coffee exporting houses and affected their performance from 1880 to 1913. At that time, Brazil was the world`s leading producer and exporter of coffee and German was the second most important importer, behind the USA, and the hub for European coffee imports. The demand for credit grew over time as exporters´ ability to provide trade finance defined their competitiveness and they became increasingly involved in upstream activities such as storage and packing. In 1888, the Brasilianische Bank für Deutschland opened its first branch in Rio de Janeiro. One of the banks` principal purposes was to engage in the finance of Brazilian coffee exports. I create two original and unique data sets on the yearly quantities of coffee exported and the credit received from the Brasilianische by 389 export houses in Rio and 152 in Santos. Using a difference in difference approach, I find that companies financed export more than companies not-financed by the bank after entry. The results moreover suggest, that in particular companies that received with more frequency credit performed better.
