Financial Market Imperfections and the impact of exchange rate movements on exports

Antoine Berthou and Nicolas Berman ()

No 3, Proceedings of the German Development Economics Conference, Berlin 2006 from Verein für Socialpolitik, Research Committee Development Economics

Abstract: This paper studies the role of financial market imperfections in the way countries' exports react to a currency depreciation. Using quarterly data for 27 developed and developing countries over the period 1990-2005, we show that the impact of a depreciation will be less positive - or even negative - for a country as: (i) firms borrow in foreign currency ; (ii) they are credit constrained ; (iii) they are specialized in industries that require more external capital; (iv) the depreciation's or devaluation's magnitude is large. This last result confirms the existence of a non-linear relationship between an exchange rate depreciation and a country's exports reaction when financial imperfections are observed. This work offers a new explanation for the consequences of recent currency crises in middle income countries.

Keywords: International Trade; Exchange Rate Movements; Financial Development; Financial Market Imperfections (search for similar items in EconPapers)
JEL-codes: F10 F32 F37 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-fmk, nep-ifn and nep-int
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Citations: View citations in EconPapers (2)

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https://www.econstor.eu/bitstream/10419/19831/1/Berthou.pdf (application/pdf)

Related works:
Journal Article: Financial Market Imperfections and the Impact of Exchange Rate Movements on Exports* (2009)
Working Paper: Financial Market Imperfections and the Impact of Exchange Rate Movements on Exports (2009)
Working Paper: Financial Market Imperfections and the Impact of Exchange Rate Movements on Exports (2009)
Working Paper: Financial market imperfections and the impact of exchange rate movements on exports (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:gdec06:4726

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