|Author Name||MIYAKAWA Daisuke (Hitotsubashi University) / HOSONO Kaoru (Gakushuin University) / UCHINO Taisuke (Research Associate, RIETI) / ONO Arito (Chuo University) / UCHIDA Hirofumi (Kobe University) / UESUGI Iichiro (Faculty Fellow, RIETI)|
|Creation Date/NO.||February 2014 14-E-010|
|Research Project||Study on Corporate Finance and Firm Dynamics|
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First draft: February 2014
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.