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

Listed author(s):
  • 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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File URL: http://www.rieti.go.jp/jp/publications/dp/14e010.pdf
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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
Handle: RePEc:eti:dpaper:14010
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  1. Jean-Charles Bricongne & Lionel Fontagné & Guillaume Gaulier & Daria Taglioni & Vincent Vicard, 2012. "Firms and the global crisis: French exports in the turmoil," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01299846, HAL.
  2. 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).
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  7. Eric S. Rosengren & Joe Peek, 2000. "Collateral Damage: Effects of the Japanese Bank Crisis on Real Activity in the United States," American Economic Review, American Economic Association, vol. 90(1), pages 30-45, March.
  8. Mary Amiti & David E. Weinstein, 2009. "Exports and Financial Shocks," NBER Working Papers 15556, National Bureau of Economic Research, Inc.
  9. Nicola Cetorelli & Linda S. Goldberg, 2012. "Follow the Money: Quantifying Domestic Effects of Foreign Bank Shocks in the Great Recession," NBER Working Papers 17873, National Bureau of Economic Research, Inc.
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  12. Victoria Ivashina & David S. Scharfstein & Jeremy C. Stein, 2012. "Dollar Funding and the Lending Behavior of Global Banks," NBER Working Papers 18528, National Bureau of Economic Research, Inc.
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  14. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
  15. Ricardo J. Caballero & Takeo Hoshi & Anil K. Kashyap, 2008. "Zombie Lending and Depressed Restructuring in Japan," American Economic Review, American Economic Association, vol. 98(5), pages 1943-1977, December.
  16. Bernard, A., 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," Working papers 97-21, Massachusetts Institute of Technology (MIT), Department of Economics.
  17. Andrea Leiter & Harald Oberhofer & Paul Raschky, 2009. "Creative Disasters? Flooding Effects on Capital, Labour and Productivity Within European Firms," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(3), pages 333-350, July.
  18. Berg, Gunhild & Schrader, Jan, 2012. "Access to credit, natural disasters, and relationship lending," Journal of Financial Intermediation, Elsevier, vol. 21(4), pages 549-568.
  19. Veronica Rappoport & Philipp Schnabl & Daniel Wolfenzon & Daniel Paravisini, 2011. "Dissecting the Effect of Credit Supply on Trade: Evidence from Matched Credit-Export Data," 2011 Meeting Papers 180, Society for Economic Dynamics.
  20. Atif Mian & Asim Ijaz Khwaja, 2006. "Tracing the Impact of Bank Liquidity Shocks: Evidence from an Emerging Market," NBER Working Papers 12612, National Bureau of Economic Research, Inc.
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  22. Yasuyuki Todo, 2011. "Quantitative Evaluation of the Determinants of Export and FDI: Firm‐level Evidence from Japan," The World Economy, Wiley Blackwell, vol. 34(3), pages 355-381, 03.
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