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Financial Sector Volatility, Banking Market Structure and Exports

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  • Pei-Chien Lin
  • Ho-Chuan Huang

Abstract

type="main" xml:id="twec12126-abs-0001"> This paper assesses the impacts of financial sector volatility and banking market structure on industrial exports. By utilising the specification of Rajan and Zingales (American Economic Review 1998; 88 , 559) on the cross-country, cross-industry data from Manova (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.

Suggested Citation

  • Pei-Chien Lin & Ho-Chuan Huang, 2014. "Financial Sector Volatility, Banking Market Structure and Exports," The World Economy, Wiley Blackwell, vol. 37(10), pages 1388-1409, October.
    • Handle: RePEc:bla:worlde:v:37:y:2014:i:10:p:1388-1409
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    File URL: http://hdl.handle.net/10.1111/twec.2014.37.issue-10
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    Cited by:

    1. Huang, Ho-Chuan (River) & Yeh, Chih-Chuan, 2017. "Level, structure, and volatility of financial development and inflation targeting," Journal of Empirical Finance, Elsevier, vol. 44(C), pages 108-124.
    2. Ozili, Peterson K, 2018. "Banking Stability Determinants in Africa," MPRA Paper 101825, University Library of Munich, Germany.
    3. Yue Hu & Siwei Lu & Huiyuan Zhang & Guibo Liu & Jiangang Peng, 2021. "Empirical Analysis on the Performance of Rural Credit Cooperative’s Shareholding Reform Based on the Rationale of Isomorphic Incentive Compatibility," Sustainability, MDPI, vol. 13(5), pages 1-29, March.
    4. Huang, Ho-Chuan & Lin, Pei-Chien, 2016. "The trade effects of counter-cyclical fiscal policies," International Review of Economics & Finance, Elsevier, vol. 45(C), pages 82-95.

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