How Do Banking Crises Affect Bilateral Exports?

Youssouf Kiendrebeogo

No 2013/150, IMF Working Papers from International Monetary Fund

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 developed and developing countries over the period 1988-2010. The results suggest that crisis-hit countries experience lower levels of bilateral exports, particularly in developing countries where supply-side shocks are found to be relatively more important than demand shocks. In developing countries, exports of manufactured goods are disproportionately hurt by banking crises and this negative effect is stronger in industries relying more on external finance. These findings are robust to correcting for potential endogeneity, to changes in the sample, and to alternative estimation methods.

Keywords: WP; banking crisis; dependent variable; banking crises interaction; banking crises; exports; trade finance; bilateral export; importer country; common currency; budget constraint; export equation; crisis window; banking crisis dummies in the export equation; banking crisis equation; banking crisis in the importer country; firms' export; growth rate; Trade balance; Global financial crisis of 2008-2009; Global (search for similar items in EconPapers)
Pages: 41
Date: 2013-06-19
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=40691 (application/pdf)

Related works:
Journal Article: How do banking crises affect bilateral exports? (2020)
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)
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:imf:imfwpa:2013/150

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().