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How Do Banking Crises Affect Bilateral Exports?, Youssouf Kiendrebeogo

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
Table Of Contents
Cover; Contents; I: Introduction; II: Empirical Literature; III: Banking Crises, Liquidity Shocks, and Trade Flows: A Simple Model; A: Model Setup; 1 Households; 2 Firms; B: Autarky Equilibrium; C: Trade Equilibrium; IV: Empirical Strategy; A: Econometric Approach; B: Data; V: Main Results; Tables; 1 Correlation Between Bilateral Exports and Banking Crises; Figures; 1 Number of Countries Experiencing a Banking Crisis (Starting Date); A: Banking Crises and Bilateral Exports; 2 The Effect of Banking Crises on Bilateral Exports; B: Differences in Resilience Across Countries and Regions
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (43 p.)
Specific Material Designation
Form Of Item

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