Title :

Exchange Rate Volatility, Financial Constraints, and Trade: Empirical Evidence from Chinese Firms

Author(s) :

Héricourt, Jérôme [Auteur]
Lille économie management - UMR 9221 [LEM]
Centre d'Etudes Prospectives et d'Informations Internationales [CEPII]
Centre d'économie de la Sorbonne [CES]
Poncet, Sandra [Auteur]
Centre d'économie de la Sorbonne [CES]
Paris School of Economics [PSE]

Journal title :

World Bank Economic Review

Pages :

First published online: October 24, 2013

Publisher :

Oxford University Press (OUP)

Publication date :

2015

ISSN :

0258-6770

English keyword(s) :

China

HAL domain(s) :

Sciences de l'Homme et Société/Economies et finances

English abstract : [en]

In this paper, we study how firm-level export performance is affected by Real Exchange Rate (RER) volatility and investigate whether this effect depends on existing financial constraints. Our empirical analysis relies on ...
Show more >In this paper, we study how firm-level export performance is affected by Real Exchange Rate (RER) volatility and investigate whether this effect depends on existing financial constraints. Our empirical analysis relies on export data for more than 100,000 Chinese exporters over the 2000-6 period. We confirm a trade-deterring effect of RER volatility. We find that firms' decision to begin exporting and the exported value decrease for destinations with a higher exchange rate volatility and that this effect is magnified for financially vulnerable firms. As expected, financial development seems to dampen this negative impact, especially on the intensive margin of export. These results provide micro-founded evidence suggesting that the existence of well-developed financial markets allows firms to hedge exchange rate risk. The results also support a key role of financial constraints in determining the macro impact of RER volatility on real outcomes.Show less >

Language :

Anglais

Peer reviewed article :

Oui

Audience :

Internationale

Popular science :

Non

Collections :

• Lille Économie Management (LEM) - UMR 9221

Source :

Harvested from HAL