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Banking crises and exports : lessons from the past

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Listed author(s):
  • Iacovone, Leonardo
  • Zavacka, Veronika

Abstract

This paper analyzes the impact of banking crises on manufacturing exports exploiting the fact that sectors differ in their needs for external financing. Relying on data from 23 banking crises episodes involving both developed and developing countries during the period 1980-2000 the authors separate the impact of banking crises on export growth from that of other exogenous shocks (i.e. demand shocks). Their findings show that during a crisis the export of sectors more dependent on external finance grow significantly less than other sectors. However, this result holds only for sectors depending more heavily on banking finance as opposed to inter-firm finance. Furthermore, sectors characterized by higher degree of assets tangibility appear to be more resilient in the face of a banking crisis. The effect of the banking crises on exports is robust and additional to external demand shocks. The effect of the latter is independent and additional to that of a banking shock, and is particularly significant for sectors producing durable goods.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5016.

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Date of creation: 01 Aug 2009
Handle: RePEc:wbk:wbrwps:5016
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Keywords: Debt Markets; Economic Theory&Research; Access to Finance; Banks&Banking Reform; Emerging Markets;

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