How Do Banking Crises Affect Bilateral Exports?

 
Author/Editor: Kiendrebeogo, Youssouf
 
Publication Date: June 19, 2013
 
Electronic Access: Free Full text (PDF file size is 975KB).
Use the free Adobe Acrobat Reader to view this PDF file

 
Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: This paper investigates whether banking crises are associated with declines in bilateral exports. We first develop a simple open economy model in which banking crises translate into negative liquidity shocks, leading to collapses in exports through supply-side and demand-side shocks. We then estimate a gravity model using a sample of developed and developing countries over the period 1988-2010. The results suggest that crisis-hit countries experience lower levels of bilateral exports, particularly in developing countries where supply-side shocks are found to be relatively more important than demand shocks. In developing countries, exports of manufactured goods are disproportionately hurt by banking crises and this negative effect is stronger in industries relying more on external finance. These findings are robust to correcting for potential endogeneity, to changes in the sample, and to alternative estimation methods.
 
Series: Working Paper No. 13/150
Subject(s): External shocks | Banking crisis | Exports | Liquidity | International trade | Economic models

 
English
Publication Date: June 19, 2013
ISBN/ISSN: 9781475576276/2227-8885 Format: Paper
Stock No: WPIEA2013150 Pages: 41
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
Please address any questions about this title to publications@imf.org