Working Paper: CEPR ID: DP9599
Authors: Holger Grg; Marina-Eliza Spaliara
Abstract: Using firm-level data for the UK, we investigate the link between firms? financial health, borrowing ratio and export exit, paying special attention to the recent financial crisis. Our results show that deterioration in the financial position of firms has increased the hazard of export exit during the crisis. We also find that the sensitivity of export exit to changes in firms? financial condition is higher during the crisis for those firms which face increases in loan spreads associated with the firm-specific interest rate.
Keywords: export market exit; financial crisis; financial pressure
JEL Codes: F1; L2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| deterioration in firms' financial positions (G32) | hazard of export exit (F10) |
| liquidity (E41) | likelihood of firms exiting the export market (F23) |
| high leverage (G19) | probability of export exit (F10) |
| sensitivity of export exit to financial conditions during crisis (F65) | export exit probabilities (C59) |
| high interest payment obligations (G32) | likelihood of exit from the export market (F10) |