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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. Davin Chor & Kalina Manova, 2010. "Off the Cliff and Back? Credit Conditions and International Trade during the Global Financial Crisis," Working Papers 08-2010, Singapore Management University, School of Economics.
  2. 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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  11. KOENIG, Pamina & MAYNERIS, Florian & PONCET, Sandra, . "Local export spillovers in France," CORE Discussion Papers RP -2225, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  14. 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.
  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. 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.
  17. 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.
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  21. 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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