Title: Essays on trade, finance and exchange rate pass-through
Authors : Fauceglia, Dario
Advisors / Reviewers : Keine Angabe
Extent : 198
Publisher / Ed. Institution : Universität St. Gallen
Publisher / Ed. Institution: St. Gallen
Issue Date: 2013
License (according to publishing contract) : Licence according to publishing contract
Series : Dissertationen / Universität St. Gallen
Series volume: 4143
Language : English
Subject (DDC) : 332: Financial economics
Abstract: This thesis consists of three essays and examines whether adverse monetary conditions such as limited external financing or an overvalued currency prevents firms from prospering. The first and second essay study to what extent firm-level credit constraints in developing countries can be a barrier for exporting activities and importing capital and intermediate goods. In both essays the new hypothesis is that a firm’s wealth, which is approximated by liquidity and leverage ratios, should become more important determinants of trade participation in countries with weaker credit market institutions. Empirically, the quality of credit market institutions in a country is inferred from indicators, such as a creditor rights measure, a proxy for the efficiency of legal debt enforcement and accounting standards. The results of the first and second essay indicate that financing obstacles and the benefits of credit market development for entering export and capital import markets are particularly high for innovative firms that are heavily dependent on external finance. Moreover, the results also reveal that institutional development of the credit market overproportionately improves access to finance for first-time exporter and capital importer. The empirical findings also suggests that innovative and non-trading firms are more severely credit constrained in countries with underdeveloped credit markets. Using disaggregated quarterly trade data for Switzerland over 2004-2011, the third essay investigates the effectiveness of natural hedging of exchange rate risk by quantifying the effect of exchange rate movements on imported input prices and their role in the pass-through into export prices. The results indicate high exchange rate pass-through into imported input prices in all sectors implying that input costs fall when the CHF appreciates. On the export side, although exporters in many sectors are not able to pass on exchange rate shocks completely to foreign consumers, which results in reduced profit margins when the CHF appreciates, cheaper imported input prices at least partly offset these adverse developments. As a consequence, the empirical results imply that the use of imported inputs is an effective strategy to reduce exchange rate risks.
Departement: School of Management and Law
Publication type: Doctoral Thesis
URI: https://digitalcollection.zhaw.ch/handle/11475/8824
Appears in Collections:Publikationen School of Management and Law

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