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Banking crises and exports: Lessons from the past

Leonardo Iacovone (), Esteban Ferro, Mariana Pereira-López and Veronika Zavacka ()

Journal of Development Economics, 2019, vol. 138, issue C, 192-204

Abstract: This paper analyzes the impact of banking crises on manufacturing exports, exploiting the fact that sectors differ in their needs for external financing. Relying on data from 160 developed and developing countries during 1970–2012, we analyze 147 banking crisis episodes and separate their impact on export growth from the impact of other exogenous shocks (e.g., demand shocks, exchange rate shocks). Our findings show that during a crisis, the exports of sectors more dependent on external finance grow significantly less than other sectors. However, this result holds only for sectors that depend on banking finance as opposed to interfirm finance (i.e., trade finance or trade credit). For sectors that depend heavily on banking finance, the effect of banking crises on exports is robust, additional to external demand shocks, and not driven by exchange rate shocks.

Keywords: Exports; Crises; Difference-in-Difference; Financial dependence (search for similar items in EconPapers)
JEL-codes: F14 G01 F36 (search for similar items in EconPapers)
Date: 2019
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Working Paper: Banking crises and exports: lessons from the past (2009) Downloads
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DOI: 10.1016/j.jdeveco.2018.12.005

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