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Firm productivity, exchange rate movements, sources of finance and export orientationInventories and sales uncertainty

Author

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  • Mustafa Caglayan

    (Department of Economics, The University of Sheffield)

  • Firat Demir

Abstract

We investigate the level and volatility effects of exchange rates on the productivity growth of manufacturing firms with heterogenous access to debt, and domestic and foreign equity markets in Turkey. We find that while exchange rate volatility affects productivity growth negatively, having access to foreign or domestic equity, or debt markets does not alleviate these effects. Furthermore, foreign owned or publicly traded companies do not appear to perform significantly better than the rest. We detect, however, that firm productivity is positively related to having access to external credit. Additionally, we find that while export (inward) oriented firms are affected less (more) by exchange rate appreciations, they are more (less) sensitive to exchange rate volatility.

Suggested Citation

  • Mustafa Caglayan & Firat Demir, 2011. "Firm productivity, exchange rate movements, sources of finance and export orientationInventories and sales uncertainty," Working Papers 2011004, The University of Sheffield, Department of Economics, revised Feb 2011.
    • Handle: RePEc:shf:wpaper:2011004
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    More about this item

    Keywords

    Productivity growth; Exchange rate volatility; Source of finance; Capital structure; Export orientation;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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