Effects of Export Orientation, Exchange Rates and Leverage on Firm Productivity: Evidence from Pakistan

2021 ◽  
pp. 097215092110564
Author(s):  
Abdul Rashid ◽  
Afaq Khan ◽  
Ahmad Fraz
Keyword(s):  
Exchange Rate ◽  
Productivity Growth ◽  
Stock Exchange ◽  
Significant Heterogeneity ◽  
Negative Effects ◽  
Firm Level ◽  
Data Set ◽  
Exchange Rate Uncertainty ◽  
Exporting Firms ◽  
Exchange Rate Changes

This article empirically scrutinizes the effect of exchange rate changes, exchange rate uncertainty and firm leverage on firm-level productivity growth. It also examines the differential effects of these variables, conditional on the levels of exports. Finally, it investigates whether a firm’s heterogeneity in terms of its share of exports in total sales matters in determining the response of a firm’s productivity growth to these variables. The empirical analysis is based on an unbalanced panel data set with annual observations of 222 exporting firms listed on the Pakistan Stock Exchange over the 2009–2017 period. We find that both exchange rate changes and exchange rate uncertainty have significant, negative effects on the firm’s productivity growth, and exporting further makes intense these effects. Yet, we show that export activities are positively related to firms’ productivity growth. We also reveal that there is a significant heterogeneity in the effects of exchange rate changes, its uncertainty and leverage, which is attributed to export intensity. Specifically, we observe that the effects are more prominent in firms that export more shares of their output to foreign markets.

scholarly journals Exports, Exchange Rates and Productivity: An Analysis of the Japanese Manufacturing Sectors

2016 ◽  
Vol 6 (1) ◽  
pp. 7
Author(s):  
Atsuyuki Kato
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Sample Selection ◽  
Specific Productivity ◽  
Negative Effects ◽  
Firm Level ◽  
Transportation Equipment ◽  
Exchange Rate Fluctuations ◽  
Exchange Rate Changes ◽  
The Impact

This paper examines the effects of exchange rate changes and productivity on manufacturing exports. Using the dataset of the Japanese manufacturing firms during the period, 2002 – 2012, we discuss if exchange rate fluctuations deter export activities and if productivity and markup differences affect it. For this study, we estimate both firm specific productivity and markups by the production function based approaches and incorporate them into the Heckman sample selection model. Our results show exchange rates are important factors to affect firm-level exports as a whole while temporal aggregation should be carefully considered. In addition, this study also reveals that productivity and markup give different impacts on firm-level exports across industries. In the transportation equipment industry, negative effects of appreciation on exports are partly mitigated by higher productivity. Markups are positively related to exports in the electronics industry while negative in the transportation equipment. Neither productivity nor markup absorbs the impact of exchange rate changes in the machinery industry. Those findings imply that stability of exchange rates is very important while the effective trade policy may vary across industries following their trade structure.

scholarly journals Effect of regional skill gaps and skill shortages on firm productivity

2019 ◽  
Vol 52 (5) ◽  
pp. 933-952 ◽  
Author(s):  
David Morris ◽  
Enrico Vanino ◽  
Carlo Corradini
Keyword(s):  
Spillover Effects ◽  
Firm Productivity ◽  
Negative Effects ◽  
Firm Level ◽  
Regional Productivity ◽  
Data Set ◽  
Industrial Sectors ◽  
Skill Gaps ◽  
The Impact ◽  
Skill Shortages

This paper contributes to the literature on regional productivity, complementing previous education and skill-level perspectives with a novel approach analysing the impact of regional skill gaps and skill shortages. This allows us to reflect the idiosyncratic needs of the regional economic structure better, considering both the demand and supply side of the skills equation in localised labour markets. Controlling for unobserved time-invariant firm-level heterogeneity and other region–industry effects across a longitudinal data set for the period 2008–2014, our analysis reveals a negative direct effect of skill shortages on firm productivity. We further find negative spillover effects for both skill gaps and skill shortages in related industries and proximate regions. Results are also shown to be heterogeneous with respect to agglomeration levels and industrial sectors. Stronger negative effects are found in industries defined by a knowledge-intensive skill base, pointing to the loss of learning effects in the presence of skill deficiencies. Conversely, agglomeration effects appear to moderate the impact of skill deficiencies through more efficient matching in the local labour market. The findings presented thus suggest that policies aimed at improving productivity and addressing the increasing regional productivity divide cannot be reduced to a simple space-neutral support for higher education and skill levels but need to recognise explicitly the presence and characteristics of place-specific skills gaps and shortages.

scholarly journals Vehicle Currency Pricing and Exchange Rate Pass-Through

2021 ◽  
Author(s):  
Natalie Chen ◽  
Wanyu Chung ◽  
Dennis Novy
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Great Recession ◽  
Firm Level ◽  
Bilateral Exchange ◽  
The Great Recession ◽  
Pass Through ◽  
Exchange Rate Changes ◽  
Exchange Rate Pass Through ◽  
The Relationship

Abstract Using detailed firm-level transactions data for UK imports, we find that invoicing in a vehicle currency is pervasive, with more than half of the transactions in our sample invoiced in neither sterling nor the exporter’s currency. We then study the relationship between invoicing currencies and the response of import unit values to exchange rate changes. We find that for transactions invoiced in a vehicle currency, import unit values are much more sensitive to changes in the vehicle currency than in the bilateral exchange rate. Pass-through therefore substantially increases once we account for vehicle currencies. This result helps to explain why UK inflation turned out higher than expected when sterling depreciated during the Great Recession and after the Brexit referendum. Finally, within a conceptual framework we show why bilateral exchange rates are not suitable for capturing exchange rate pass-through under vehicle currency pricing. Overall, our results help to clarify why the literature often finds a disconnect between exchange rates and prices when vehicle currencies are not accounted for.

Exchange-Rate Volatility and Industry Trade Between Japan and China

2012 ◽  
Vol 12 (3) ◽  
pp. 1850268 ◽  
Author(s):  
Mohsen Bahmani-Oskooee ◽  
Scott W. Hegerty ◽  
Jia Xu
Keyword(s):  
Exchange Rate ◽  
Bilateral Trade ◽  
Exchange Rate Volatility ◽  
Trade Flows ◽  
Negative Effects ◽  
Exchange Rate Uncertainty ◽  
Long Run ◽  
Bilateral Trade Flows ◽  
Short Run ◽  
Export Industries

Exchange-rate risk is often thought to reduce international trade flows, but numerous theoretical and empirical analyses have pointed toward positive as well as negative effects. This is particularly true when bilateral trade flows for individual industries are estimated. In this study, we extend the literature to the case of Japanese trade with China for 110 import industries and 95 export industries. Aggregate Japanese exports, but not imports, respond to real exchange rate volatility in the long run, while most individual export and import industries respond in the short run. Although many individual Japanese import industries are affected in the long run by risk, mostly negatively, this is even more the case for exporters. A larger proportion of Japanese export industries are affected by exchange rate uncertainty for most industry sectors. Manufacturing exports are particularly vulnerable to this risk, with a large share responding negatively to increased volatility.

scholarly journals Spillovers and Dynamic Correlations between REITs, Exchange Rates, and Equities in Japan

2021 ◽  
Vol 10 (4) ◽  
pp. 13
Author(s):  
Chikashi Tsuji
Keyword(s):  
Exchange Rate ◽  
Financial Markets ◽  
Stock Exchange ◽  
Real Estate Investment Trust ◽  
Future Research ◽  
Dollar Exchange Rate ◽  
Volatility Spillovers ◽  
Dynamic Correlations ◽  
New Findings ◽  
Exchange Rate Changes

This paper investigates return transmission, volatility spillovers, and dynamic correlations between the Tokyo Stock Exchange (TSE) Real Estate Investment Trust (REIT) index, the Nikkei 225 index, and the yen/dollar exchange rate. As a result, we find many new findings and these all show our significant contributions as follows. First, there is return transmission from the Nikkei 225 to the TSE REIT index. Second, there is bidirectional return transmission between the Nikkei 225 and the yen/dollar exchange rate. Third, there are bidirectional volatility spillovers between the Nikkei 225 and the TSE REIT index. Fourth, there are volatility spillovers from the Nikkei 225 to the yen/dollar exchange rate. Fifth, dynamic conditional correlations (DCCs) between TSE REIT returns and Nikkei 225 returns are not low. Moreover, DCCs between Nikkei 225 returns and yen/dollar exchange rate changes are not high. Furthermore, DCCs between TSE REIT returns and yen/dollar exchange rate changes are quite low. These our new findings shall be useful for not only deepening our understanding of financial markets but also our related future research.

scholarly journals Do Exchange Rate Changes have Symmetric or Asymmetric Effects on the Demand for Money in Korea?

2017 ◽  
Vol 9 (2) ◽  
pp. 155-168
Author(s):  
Mohsen Bahmani-Oskooee ◽  
Jungho Baek
Keyword(s):  
Exchange Rate ◽  
Wealth Effects ◽  
Adjustment Process ◽  
Negative Effects ◽  
Demand For Money ◽  
Asymmetric Effects ◽  
Nonlinear Ardl ◽  
Long Run ◽  
The Exchange Rate ◽  
Exchange Rate Changes

Previous studies that included the exchange rate in the Korean demand for money assumed that the effects of the exchange rate changes are symmetric and adjustment process is linear. They found no significant effects. In this paper we apply Shin et al.’s (2014) Nonlinear ARDL approach to cointegration and error-correction modeling and test the symmetric versus asymmetric effects of exchange rate changes on the demand for money in Korea. Using quarterly data over the period 1973-2014, the results show that indeed the effects are asymmetric in the short run. In the long run, however, although the effects are symmetric but both won depreciation and won appreciation have significantly negative effects on the demand for money, supporting the wealth effects argument.

scholarly journals A survey on the effects of the exchange rate changes and financial flexibility on the usage of financial leverage in accepted companies of Tehran stock exchange

2016 ◽  
Vol 2 (2) ◽  
pp. 32
Author(s):  
Reza Zare
Keyword(s):  
Exchange Rate ◽  
Linear Regression ◽  
Stock Exchange ◽  
Main Issue ◽  
Financial Leverage ◽  
Significant Relation ◽  
Financial Flexibility ◽  
The Exchange Rate ◽  
Exchange Rate Changes ◽  
Study Type

<p>In the present study we try to examine the exchange rate changes and  financial flexibility as the economic stable indexes on the financial leverage  use in the companies so the main issue in this study is to define the financial leverage relation with  exchange rate changes and financial flexibility. That is why 88 companies of the companies listed in Tehran stock exchange in 2005–2011. The study type is descriptive–correlative and the multivariable linear regression was used to analyze the data. The findings from the hypotheses test state there is a significant relation between financial leverage and financial flexibility while there isn't relation between financial leverage and exchange rate changes.</p>

scholarly journals Macroeconomic sensitivity and firm level volatility: the case of New York Stock Exchange

2021 ◽  
Vol 19 (02) ◽  
pp. 198-211
Author(s):  
Muhammad Saqib Bashir Butt ◽  
Hasniza Mohd. Taib
Keyword(s):  
New York ◽  
Exchange Rate ◽  
Stock Returns ◽  
Stock Exchange ◽  
Oil Prices ◽  
Yield Spread ◽  
New York Stock Exchange ◽  
Firm Level ◽  
Macroeconomic Factors ◽  
York Stock Exchange

Purpose – This paper investigates whether the macroeconomic factors affect the firm stock returns volatility differently depending on their location in different sectors. For this purpose, daily financial time-series data for 683 firms located in nine US sectors for the period of 2000 to 2017 are employed. Research methodology – The GARCH (1,1) model was applied to each firm located in nine US sectors. The four macroeconomic factors, namely, exchange rate, treasury yield spread, oil prices, and market return, are included in both mean and variance equations of GARCH (1,1) model to estimate the effect. Research limitations – This research study is limited to the New York Stock Exchange; therefore, it can be extended to the other economies as well. Further, this study uses one firm feature that is the sectoral location of the firm; it is recommended that some other firm features should be studied to explore the volatility behaviour of firms. In the methodological part, this study does not include the lag effect, since it is recognised in the literature that the investors underreact to public information, so future research can be extended to test the underreaction hypothesis. Practical implications – This study has implications for the investors and policymakers. Since it has emerged from the findings that some sectors are more sensitive than others to macroeconomic changes, so this knowledge will help the investors to diversify their portfolio and policymakers to maintain macroeconomic discipline. Originality/Value – The main contribution of this study is that it undertakes the assumption of heterogeneous nature of firms and conducts a detailed firm level analysis by sector covering a more extended period of time to investigate the impact of four macroeconomic factors, namely, exchange rate, treasury yield spread, oil prices, and market return on firm stock returns, volatility using daily data. Further, this study contributes by including all the macroeconomic factors together as an exogenous variable in mean and conditional variance equations of the GARCH (1,1) model to investigate the effect simultaneously.

scholarly journals On The Dynamic Relationship Between Exchange Rates And Industry Stock Prices: Some Empirical Evidence From Malaysia

2011 ◽  
Vol 21 (4) ◽  
Author(s):  
Hong Rim ◽  
Rosle Mohidin
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Stock Prices ◽  
Strong Relationship ◽  
Exchange Market ◽  
Negative Effects ◽  
Positive Effects ◽  
Dynamic Relationship ◽  
Exchange Rate Changes ◽  
Dynamic Relationships

This study examines the dynamic relationships between exchange rate and stock prices at the industry level in Malaysia during June 1996 - August 1998.&nbsp; This study finds a strong relationship between the two series during the financial crisis (July 1997 - August 1998) and differing effects of exchange-rate changes on the performance of stock prices across different industries.&nbsp; In addition, exchange-rate changes have negative effects on some industries (e.g., construction) but positive effects on other industries (e.g., property).&nbsp; Thus, government needs to concentrate on stabilizing the exchange market first while financial managers need to carefully analyze the effects of changes in exchange rates on specific industries to better manage foreign-exchange exposures.

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