Financial Shocks and Firm Exports: A Natural Experiment Approach with a Massive Earthquake

This paper investigates the effect of financial shocks on firms' exports. To circumvent endogeneity problems, we utilize the natural experiment provided by Japan's Great Hanshin-Awaji earthquake in 1995. Using a unique firm-level dataset, we single out the effect of exogenous financial shocks on firms' exports by focusing on exports of those firms that were not directly damaged by the earthquake but had main bank relationships with damaged banks. Our main findings are twofold. First, as for the extensive margins of exports, the probabilities of starting exports or of expanding export destination areas were smaller for undamaged firms transacted with a damaged main bank than for those transacted with an undamaged main bank. Second, as for the intensive margins of exports, undamaged firms transacted with a damaged main bank had a lower export-to-sales ratio than those transacted with an undamaged main bank. These findings lend support to the existence of the financial constraint on firm exports.基盤研究(S) = Grants-in-Aid for Scientific Research (S)48 p