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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Taylor & Francis Group
2020
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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) |
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external commercial borrowing financial development currency depreciation competitiveness effect credit constraints ardl cointegration Business HF5001-6182 Management. Industrial management HD28-70 |
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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 |
_version_ |
1718382215685996544 |