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Financial Sector Volatility, Banking Market Structure and Exports
Author(s) -
Lin PeiChien,
Huang HoChuan
Publication year - 2014
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12126
Subject(s) - volatility (finance) , economics , banking industry , financial system , market structure , bank credit , financial services , financial market , finance , monetary economics , industrial organization
This paper assesses the impacts of financial sector volatility and banking market structure on industrial exports. By utilising the specification of R ajan and Z ingales ( American Economic Review 1998; 88 , 559) on the cross‐country, cross‐industry data from M anova ( Journal of International Economics 2008; 76 , 33), we find that financial sector volatility, measured as the standard deviation of the growth of private credit, and banking market structure, measured as the share of the three largest banks’ assets in a country, respectively exert significantly negative and positive impacts on industrial exports, particularly for those industries that are more externally financially dependent. The findings are robust to a variety of kinds of sensitivity analysis and thus lend support to the notion that a more stable and concentrated banking system is important to the exports of those industries that rely more on external finance.