Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/244907 
Year of Publication: 
2020
Citation: 
[Journal:] Cogent Business & Management [ISSN:] 2331-1975 [Volume:] 7 [Issue:] 1 [Publisher:] Taylor & Francis [Place:] Abingdon [Year:] 2020 [Pages:] 1-22
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
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.
Subjects: 
external commercial borrowing
financial development
currency depreciation
competitiveness effect
credit constraints
ARDL cointegration
JEL: 
F31
F34
G00
G23
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.