Financing exports of goods: a constraint on Greek economic growth
Ioanna C. Bardakas
Bank of Greece
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.
Keywords: Exports, bank financing, economic growth.
JEL classification codes: F10, F14, C32
Acknowledgements: I am grateful to George Zombanakis for providing the motivation for this paper and to Heather Gibson for her constructive comments and helpful suggestions. I am also grateful to Nikolaos Kamberoglou and Nikoleta Koliou for their help on the use of statistics of bank financing of firms. Finally, I would like to thank Christos Catiforis and Evaggelia Georgiou for helpful discussions. The opinions expressed in this paper are those of the author and do not necessarily represent the views of the Bank of Greece.
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