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Financing exports of goods: a constraint on Greek economic growth

Author

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  • Ioanna C. Bardakas

    (Bank of Greece)

Abstract

This paper assesses the effect of financing conditions on exports of goods in Greece during the last decade. Controlling for reverse causality which is feasible with the Johansen multivariate cointegration technique (1988) we have adopted, we estimate a reduced form of exports showing the existence of a relationship between companies’ ability to access bank financing and exports of goods both in the long and in the short-run. Robustness is established by estimating alternative specifications producing comparable results using absolute or relative prices and allowing for cyclical effects. More specifically, we show that during an economic crisis (given that for large part of the sample period credit has been declining) a 10 percent drop in firm financing leads to a decline in export growth by 6 to 9 percent in the short-run and by 2 to 4 percent in the long-run. Additionally, a similar increase in bank financing during an economic recovery is expected to produce a 6 to 9 percent increase in exports a result which will lead to an approximate increase of 1 to 2 percent to current GDP and economic growth.

Suggested Citation

  • Ioanna C. Bardakas, 2014. "Financing exports of goods: a constraint on Greek economic growth," Working Papers 178, Bank of Greece.
    • Handle: RePEc:bog:wpaper:178
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    File URL: https://www.bankofgreece.gr/Publications/Paper2014178.pdf
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    Citations

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    Cited by:

    1. Christine de la Maisonneuve, 2016. "How to boost export performance in Greece," OECD Economics Department Working Papers 1299, OECD Publishing.
    2. Ansgar Belke & Dominik Kronen, 2016. "Exchange rate bands of inaction and play-hysteresis in Greek exports to the Euro Area, the US and Turkey: sectoral evidence," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 43(2), pages 349-390, May.
    3. Egzona Hani Selimi & Milan Eliskovski, 2018. "The effect of household and enterprise credit on current account balance: Evidence from the Republic of North Macedonia," Working Papers 2018-09, National Bank of the Republic of North Macedonia.
    4. Heather D Gibson & Georgia Pavlou, 2017. "Exporting and performance:evidence from Greek firms," Economic Bulletin, Bank of Greece, issue 45, pages 7-30, July.
    5. Memanova, Tamilyam & Mylonidis, Nikolaos, 2020. "Exploring the nexus between bank market power and exports," Economic Modelling, Elsevier, vol. 84(C), pages 222-233.

    More about this item

    Keywords

    Exports; bank financing; economic growth.;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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