How do banking crises affect bilateral exports?

Youssouf Kiendrebeogo

Empirical Economics, 2020, vol. 58, issue 3, No 20, 1459 pages

Abstract: Abstract This paper investigates whether banking crises are associated with declines in bilateral exports. We first develop a simple open economy model in which banking crises translate into negative liquidity shocks, leading to collapses in exports through supply-side and demand-side shocks. We then estimate a gravity model using a sample of 75 countries over the 1988–2010 period. The results suggest that crisis-hit countries experience lower levels of bilateral exports. Exports of manufactured goods are disproportionately hurt by crises, and this negative effect is stronger in industries relying more on external finance. These findings are robust to correcting for potential endogeneity, to controlling for outliers, and to using alternative estimation methods.

Keywords: Banking crises; Exports; External finance; Gravity model (search for similar items in EconPapers)
JEL-codes: C23 F14 G01 O16 (search for similar items in EconPapers)
Date: 2020
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Working Paper: How Do Banking Crises Affect Bilateral Exports? (2013)
Working Paper: How Do Banking Crises Affect Bilateral Exports? (2013)
Working Paper: How Do Banking Crises Affect Bilateral Exports? (2013)
Working Paper: How Do Banking Crises Affect Bilateral Exports? (2013)
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DOI: 10.1007/s00181-018-1606-5

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