banks have.

The empirical framework is altered as follows: _Log(Exportsijt)_ = _α_ + _βFinancial developmentit_ + _γRegional trade-partner bank?ijt_ + _Xijtδ_ + _εijt_ (3) _Log(Exportsijt)_ = _τ_ + _φFinancial developmentit_ + _χShare(Regional trade-partner bankijt)_ + _Xijtψ_ + _ωijt_ (4) where _Trade-partner regional bank?ijt_ is a dummy variable that equals one if Turkish subregion _i_ has a bank from countries close to trade partner _j_ , and _Share(Trade-partner regional bankijt)_ is the share of branches of the bank from countries close to the trade partner. We consider countries that are close to the trade partner to be those within the same region as the trade partner.<sup>6</sup> The other variables in Equations 3 and 4 are defined as above.

Finally, we want to distinguish the effect of the information channels before and during the crisis. A dummy variable that captures the crisis period will be interacted with the variables for the financing and information channels in the regressions. The dummy _Crisis?t (Yes=1)_ takes the value one for the years 2008 to 2010, the last year in our sample. As such it captures the latest financial crisis, taking into account the delay in contagion from the US.

The analysis will use data on 26 Turkish sub-regions and 180 partner countries between 2002 and 2010. It primarily relies on two data sources. First, NUTS 2 sub-regional economic data come from Celbis, Nijkamp, and Poot (2014).<sup>7</sup> The NUTS 2 sub-regional economic data are collected by Celbis, Nijkamp, and Poot (2014), and provide information on the main variables used in the analysis. The sub-regional exports ( _Exportsijt_ ) is the total value of bilateral exports of sub-region _i_ to country _j_ at time _t_ .<sup>8</sup> Sub-regional gross value added ( _Regional GVAit_ ) is obtained from Turkstat and the trade-partner country gross value-added is from the UN Statistics Division.<sup>9</sup> All three variables are measured in constant 2005 100,000 USD. Bilateral distance between the Turkish sub-region and trade partner country ( _Distanceij_ ) is measured as the Euclidean distance between the most populous province of

> 6 We use seven geographical aggregates, defined according to the World Development Indicators. Namely, they are East Asia and Pacific, Europe and Central Asia, Latin America and Caribbean, Middle East and North Africa, North America, South Asia, Sub-Saharan Africa.

> 7The term NUTS stands for “Nomenclature of Units for Territorial Statistic” and is defined in the 2002 agreement between the Turkish authorities and Eurostat. There are three NUTS level: NUTS 1 identifies 12 regions, NUTS 2 26 sub-regions, and NUTS 3 81 provinces. The classification is not a one-to-one mapping of the administrative territorial subdivision of Turkey and is used mainly for statistical purposes and comparability with other EU countries.

> 8The analysis does not cover Belgium and the Islamic Republic of Iran as these countries are not available in the data from Celbis, Nijkamp, and Poot (2014).

> 9The sub-regional GVA data is compiled in terms of 1998 national currency. To correct for inflation and exchange rate fluctuations, Celbis, Nijkamp, and Poot (2014) rely on the external currency deflator and the USD conversion rate provided by the Turkey Regional Ministry of Development.

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