Real exchange rates, financial market imperfections and exports: The case of 5 ASEAN economies for the period 1998 to 2008

• Main Authors: Concepcion, Karen R., Ngan, Diane Kristine O., Samuel, Diane Kristine I.
• Format: text
• Language: English
• Published: Animo Repository 2010
• Subjects: Foreign exchange rates > Southest Asia; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/18529
• Institution: De La Salle University

Do financial market imperfections play a role between the relationship of real exchange rates and exports? We addressed this problem by utilizing a dataset which included five ASEAN economies, namely Indonesia, Malaysia, Philippines, Singapore and Thailand for the years 1998 to 2008. Employing panel data estimations on an augmented gravity model, we examined if real exchange rates and its interactions with financial market imperfections (credit constraints and foreign currency borrowing) are forms of trade resistance. We found out that (1) generally, the traditional view on real exchange rate effect holds in the ASEAN-5 economies (2) financial market imperfections distort positive effect of real exchnage rates by reducing it and, (3) modern view on real exchange rates effect may hold if the country has a sufficiently high level of financial market imperfection. Based from these results, we formulated important implications of our study for policymakers and for the academe.