Exchange rates and firm survival: An examination with Turkish firm-level data

Nazlı Toraganlı and Ege Yazgan ()

Economic Systems, 2016, vol. 40, issue 3, 433-443

Abstract: Micro-level empirical research has begun to obtain important results on the effects of currency variations on firms’ survival. The literature has, however, lacked a detailed analysis of the effects of exchange rates on firms’ survival behavior in emerging markets due to a scarcity of firm-level information. Using a firm-level dataset, we investigate the impact of currency appreciation on the survival behavior of Turkish firms in the manufacturing industries for 2002–2009. Our results suggest that real exchange rate appreciation decreases the probability of survival in the manufacturing industries. We also find that high-productivity firms have a higher probability of survival than low-productivity firms following an appreciation of the exchange rate. Our findings indicate that the negative effect of a 1% real appreciation of the domestic currency on the survival probability of a given firm ranges from 4.5 to 9%, providing evidence for the vulnerability of developing countries to exchange rate movements. This evidence indicates that, especially for emerging market economies, economic events and policies leading to an appreciation in the domestic currency should be managed cautiously.

Keywords: Exchange rate; Firm-level; Export; Emerging markets; Survival (search for similar items in EconPapers)
JEL-codes: F14 F31 F41 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0939362516300395
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:40:y:2016:i:3:p:433-443

DOI: 10.1016/j.ecosys.2015.09.009

Access Statistics for this article

Economic Systems is currently edited by R. Frensch

More articles in Economic Systems from Elsevier Contact information at EDIRC.
Bibliographic data for series maintained by Catherine Liu ().