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Growth under Exchange Rate Volatility: Does Access to Foreign or Domestic Equity Markets Matter?

Firat Demir

MPRA Paper from University Library of Munich, Germany

Abstract: Employing a matched employer-employee dataset, this paper explores the effects of exchange rate volatility on the growth performances of domestic versus foreign, and publicly traded versus non-traded private manufacturing firms in a major developing country, Turkey. The empirical results using dynamic panel data estimation techniques and comprehensive robustness tests suggest that exchange rate volatility has a significant growth reducing effect on manufacturing firms. However, having access to foreign, and to a lesser degree, domestic equity markets is found to reduce these negative effects at significant levels. These findings continue to hold after controlling for firm heterogeneity due to differences in export orientation, external indebtedness, profitability, productivity, size, industrial characteristics, and time-variant institutional changes.

Keywords: Growth; Foreign Direct Investment; Capital Structure; Exchange Rate Volatility, Manufacturing Sector (search for similar items in EconPapers)
JEL-codes: F22 F31 G15 G31 G32 (search for similar items in EconPapers)
Date: 2011-09-01
New Economics Papers: this item is included in nep-ara and nep-ifn
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https://mpra.ub.uni-muenchen.de/37398/1/MPRA_paper_37398.pdf original version (application/pdf)

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Journal Article: Growth under exchange rate volatility: Does access to foreign or domestic equity markets matter? (2013) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:37398

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