Do external commercial borrowings and financial development affect exports?

In this study, we examine the competitiveness effect of currency depreciation in the presence of external commercial borrowing (ECBs) and low financial development. The estimates of autoregressive distributed lag (ARDL) show the contractionary effects of exchange rate depreciation on exports owing t...

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Autores principales: Ashis Kumar Pradhan, Gourishankar S Hiremath
Formato: article
Lenguaje:EN
Publicado: Taylor & Francis Group 2020
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Acceso en línea:https://doaj.org/article/71c4fb49a37d4414852fc9ca20acae20
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spelling oai:doaj.org-article:71c4fb49a37d4414852fc9ca20acae202021-12-02T17:00:23ZDo external commercial borrowings and financial development affect exports?2331-197510.1080/23311975.2020.1796269https://doaj.org/article/71c4fb49a37d4414852fc9ca20acae202020-01-01T00:00:00Zhttp://dx.doi.org/10.1080/23311975.2020.1796269https://doaj.org/toc/2331-1975In this study, we examine the competitiveness effect of currency depreciation in the presence of external commercial borrowing (ECBs) and low financial development. The estimates of autoregressive distributed lag (ARDL) show the contractionary effects of exchange rate depreciation on exports owing to increased liability denominated in foreign currency such as ECBs. We also find a positive relationship between bank credit and exports, but the marginal benefits of domestic credit diminish when the exchange rate depreciates. The findings of the study suggest that natural hedging does not act as a cushion against shocks and thus calls for the mandatory use of derivatives by firms. The development of domestic credit markets is essential to reap the benefits of currency depriciation in the export sector.Ashis Kumar PradhanGourishankar S HiremathTaylor & Francis Grouparticleexternal commercial borrowingfinancial developmentcurrency depreciationcompetitiveness effectcredit constraintsardl cointegrationBusinessHF5001-6182Management. Industrial managementHD28-70ENCogent Business & Management, Vol 7, Iss 1 (2020)
institution DOAJ
collection DOAJ
language EN
topic external commercial borrowing
financial development
currency depreciation
competitiveness effect
credit constraints
ardl cointegration
Business
HF5001-6182
Management. Industrial management
HD28-70
spellingShingle external commercial borrowing
financial development
currency depreciation
competitiveness effect
credit constraints
ardl cointegration
Business
HF5001-6182
Management. Industrial management
HD28-70
Ashis Kumar Pradhan
Gourishankar S Hiremath
Do external commercial borrowings and financial development affect exports?
description In this study, we examine the competitiveness effect of currency depreciation in the presence of external commercial borrowing (ECBs) and low financial development. The estimates of autoregressive distributed lag (ARDL) show the contractionary effects of exchange rate depreciation on exports owing to increased liability denominated in foreign currency such as ECBs. We also find a positive relationship between bank credit and exports, but the marginal benefits of domestic credit diminish when the exchange rate depreciates. The findings of the study suggest that natural hedging does not act as a cushion against shocks and thus calls for the mandatory use of derivatives by firms. The development of domestic credit markets is essential to reap the benefits of currency depriciation in the export sector.
format article
author Ashis Kumar Pradhan
Gourishankar S Hiremath
author_facet Ashis Kumar Pradhan
Gourishankar S Hiremath
author_sort Ashis Kumar Pradhan
title Do external commercial borrowings and financial development affect exports?
title_short Do external commercial borrowings and financial development affect exports?
title_full Do external commercial borrowings and financial development affect exports?
title_fullStr Do external commercial borrowings and financial development affect exports?
title_full_unstemmed Do external commercial borrowings and financial development affect exports?
title_sort do external commercial borrowings and financial development affect exports?
publisher Taylor & Francis Group
publishDate 2020
url https://doaj.org/article/71c4fb49a37d4414852fc9ca20acae20
work_keys_str_mv AT ashiskumarpradhan doexternalcommercialborrowingsandfinancialdevelopmentaffectexports
AT gourishankarshiremath doexternalcommercialborrowingsandfinancialdevelopmentaffectexports
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