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Financial Shocks and Firm Exports: A natural experiment approach with a massive earthquake

  • MIYAKAWA Daisuke
  • HOSONO Kaoru
  • UCHINO Taisuke
  • ONO Arito
  • UCHIDA Hirofumi
  • UESUGI Iichiro

This paper investigates the effect of financial shocks on firms' exports. To circumvent endogeneity problems, we utilize the natural experiment provided by the Great Hanshin-Awaji Earthquake in 1995. Using a unique firm-level dataset, we single out the effect of exogenous financial shocks on firms' exports by focusing on exports of firms that were not directly damaged by the earthquake but that transacted with damaged banks as their main banks. Our main findings are twofold. First, as for the extensive margins of exports, the probabilities of starting exports or of expanding export destination areas were smaller for undamaged firms that transacted with a damaged main bank than for that transacted with an undamaged main bank. Second, as for the intensive margins of exports, undamaged firms that transacted with a damaged main bank had a lower export-to-sales ratio than that transacted with an undamaged main bank. These findings lend support to the existence of the financial constraint on firm exports.

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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 14010.

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Length: 43 pages
Date of creation: Feb 2014
Date of revision:
Handle: RePEc:eti:dpaper:14010
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  1. Bricongne, J-C. & Fontagné, L. & Gaulier, G. & Taglioni, D. & Vicard, V., 2009. "Firms and the global crisis: French exports in the turmoil," Working papers 265, Banque de France.
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  11. Shrieves, Ronald E. & Dahl, Drew, 2003. "Discretionary accounting and the behavior of Japanese banks under financial duress," Journal of Banking & Finance, Elsevier, vol. 27(7), pages 1219-1243, July.
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  13. Davin Chor & Kalina Manova, 2010. "Off the Cliff and Back? Credit Conditions and International Trade during the Global Financial Crisis," NBER Working Papers 16174, National Bureau of Economic Research, Inc.
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  15. Berg, Gunhild & Schrader, Jan, 2012. "Access to credit, natural disasters, and relationship lending," Journal of Financial Intermediation, Elsevier, vol. 21(4), pages 549-568.
  16. HOSONO Kaoru & MIYAKAWA Daisuke & UCHINO Taisuke & HAZAMA Makoto & ONO Arito & UCHIDA Hirofumi & UESUGI Iichiro, 2012. "Natural Disasters, Damage to Banks, and Firm Investment," Discussion papers 12062, Research Institute of Economy, Trade and Industry (RIETI).
  17. Van Rijckeghem, Caroline & Weder, Beatrice, 2001. "Sources of contagion: is it finance or trade?," Journal of International Economics, Elsevier, vol. 54(2), pages 293-308, August.
  18. Andrea Leiter & Harald Oberhofer & Paul Raschky, 2009. "Creative Disasters? Flooding Effects on Capital, Labour and Productivity Within European Firms," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 43(3), pages 333-350, July.
  19. Paravisini, Daniel & Rappoport, Veronica & Schnabl, Philipp & Wolfenzon, Daniel, 2010. "Dissecting the Effect of Credit Supply on Trade: Evidence from Matched Credit-Export Data," Working Papers 2010-022, Banco Central de Reserva del Perú.
  20. Bernanke, Ben S, 1983. "Nonmonetary Effects of the Financial Crisis in Propagation of the Great Depression," American Economic Review, American Economic Association, vol. 73(3), pages 257-76, June.
  21. Minetti, Raoul & Zhu, Susan Chun, 2011. "Credit constraints and firm export: Microeconomic evidence from Italy," Journal of International Economics, Elsevier, vol. 83(2), pages 109-125, March.
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