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Exports and Financial Shocks

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  • Mary Amiti
  • David E. Weinstein

Abstract

A striking feature of many financial crises is the collapse of exports relative to output. This article examines whether deteriorations in bank health can help explain the large drops in exports relative to output. Our article is the first to establish a causal link between the health of banks providing trade finance and growth in a firm's exports relative to its domestic sales. We overcome measurement and endogeneity issues by using a unique data set, covering the Japanese financial crises from 1990 through 2010, which enables us to match exporters with the main bank that provides them with trade finance. Our point estimates are economically and statistically significant, suggesting that the health of financial institutions is an important determinant of firm-level exports during crises. Copyright 2011, Oxford University Press.

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File URL: http://hdl.handle.net/10.1093/qje/qjr033
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Bibliographic Info

Article provided by Oxford University Press in its journal The Quarterly Journal of Economics.

Volume (Year): 126 (2011)
Issue (Month): 4 ()
Pages: 1841-1877

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Handle: RePEc:oup:qjecon:v:126:y:2011:i:4:p:1841-1877

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  1. Michael W. Klein & Eric Rosengren & Joe Peek, 2000. "Troubled banks, impaired foreign direct investment: the role of relative access to credit," Working Papers 00-4, Federal Reserve Bank of Boston.
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  13. Nicolas Berman and Philippe Martin, 2010. "The Vulnerability Of Sub-Saharan Africa To The Financial Crisis: The Case Of Trade," RSCAS Working Papers 2010/15, European University Institute.
  14. Yafeh Yishay, 1995. "Corporate Ownership, Profitability, and Bank-Firm Ties: Evidence from the American Occupation Reforms in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 9(2), pages 154-173, June.
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