Weathering the Storm : Responses by Cambodian Firms to the Global Financial Crisis

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collection.link.5
https://openknowledge.worldbank.org/handle/10986/9
collection.name.5
Policy Research Working Papers
dc.contributor.author
Guimbert, Stephane
dc.contributor.author
Oostendorp, Remco
dc.date.accessioned
2013-01-03T17:52:01Z
dc.date.available
2013-01-03T17:52:01Z
dc.date.issued
2012-10
dc.date.lastModified
2021-04-23T14:02:59Z
dc.description.abstract
Firms have various ways to cope with external risks. This paper analyzes the risk coping behavior that entails the smoothing of inputs (labor, raw materials, or capital). The theoretical framework shows that, if they face adjustment costs, firms prefer to smooth their inputs, especially if they expect a demand shock to be temporary. However, credit constrained firms will be adversely affected by the presence of liquidity constraints, and this will create a welfare loss due to incomplete smoothing. The authors estimate this behavior using a panel of Cambodian firms at the time of the 2008 global economic crisis. The survey shows that these firms were hard hit by the economic crisis between 2008 and 2009, with an average fall in demand (sales) of 30 percent. Based on the theoretical framework, the analysis can estimate the responsiveness of labor, capital, and raw materials input demand to demand shocks. It finds that firms try to smooth in particular if they believe the shock is temporary; in fact non-credit constrained firms reduce their inputs much less than firms that were credit constrained when the demand shock is expected to be temporary. The paper estimates that the welfare loss from incomplete smoothing due to credit constraints is many multiples of the adjustment costs of the firms that were not credit constrained. This has important policy implications about the role of financial sector development and regulations beyond the capital market. This micro analysis also has macro implications: if all firms expect a shock to be permanent, their combined limited smoothing of inputs will indeed make the shock more likely to be permanent.
en
dc.identifier
http://documents.worldbank.org/curated/en/2012/10/16812612/weathering-storm-responses-cambodian-firms-global-financial-crisis
dc.identifier.uri
http://hdl.handle.net/10986/12064
dc.language
English
dc.language.iso
en_US
dc.publisher
World Bank, Washington, DC
dc.relation.ispartofseries
Policy Research Working Paper; No. 6220
dc.rights
CC BY 3.0 IGO
dc.rights.holder
World Bank
dc.rights.uri
http://creativecommons.org/licenses/by/3.0/igo/
dc.subject
ACCESS TO CREDIT
dc.subject
ACCESS TO FINANCE
dc.subject
ACCESS TO FORMAL FINANCE
dc.subject
ADJUSTMENT COST
dc.subject
ADJUSTMENT COSTS
dc.subject
AGRICULTURE
dc.subject
AVAILABILITY OF FINANCE
dc.subject
BANKRUPTCIES
dc.subject
BANKRUPTCY
dc.subject
BARGAINING POWER
dc.subject
BRANCHES
dc.subject
BUSINESS ENVIRONMENT
dc.subject
CAPITAL MARKET
dc.subject
CAPITAL MARKETS
dc.subject
CAPITAL REGULATION
dc.subject
CAPITAL REQUIREMENTS
dc.subject
CAPITAL STOCK
dc.subject
COMMERCIAL BANKS
dc.subject
CONSUMPTION SMOOTHING
dc.subject
CORPORATE PERFORMANCE
dc.subject
CREATIVE DESTRUCTION
dc.subject
CREDIT CONSTRAINED FIRM
dc.subject
CREDIT CONSTRAINED FIRMS
dc.subject
CREDIT CONSTRAINT
dc.subject
CREDIT CONSTRAINTS
dc.subject
CREDIT CRUNCH
dc.subject
DEVELOPMENT ECONOMICS
dc.subject
DEVELOPMENT POLICY
dc.subject
DRIVERS
dc.subject
EARNINGS
dc.subject
ECONOMIC CRISES
dc.subject
ECONOMIC CRISIS
dc.subject
ECONOMIC POLICY
dc.subject
ECONOMIC SHOCKS
dc.subject
ELASTICITY
dc.subject
EMPLOYMENT
dc.subject
EMPLOYMENT GROWTH
dc.subject
EMPLOYMENT IMPACT
dc.subject
EXPORTS
dc.subject
EXTERNAL FINANCE
dc.subject
FACTOR DEMAND
dc.subject
FINANCIAL CRISIS
dc.subject
FINANCIAL DEVELOPMENT
dc.subject
FINANCIAL INSTITUTION
dc.subject
FINANCIAL POLICY
dc.subject
FINANCIAL SECTOR
dc.subject
FINANCIAL SECTOR DEVELOPMENT
dc.subject
FINANCING NEED
dc.subject
FIRM LEVEL
dc.subject
FIRM PERFORMANCE
dc.subject
FIRM PRODUCTIVITY
dc.subject
FIRM SIZE
dc.subject
FIRM SURVEY
dc.subject
FIRM SURVEYS
dc.subject
FIXED COST
dc.subject
FIXED COSTS
dc.subject
GDP
dc.subject
HOUSEHOLDS
dc.subject
ID
dc.subject
INEQUALITY
dc.subject
INFLATION
dc.subject
INFLATION RATE
dc.subject
INFORMAL FINANCE
dc.subject
INPUT PRICES
dc.subject
INSURANCE
dc.subject
INTERNATIONAL BANK
dc.subject
INVENTORIES
dc.subject
INVENTORY
dc.subject
INVESTMENT DECISIONS
dc.subject
LABOR DEMAND
dc.subject
LABOR MARKET
dc.subject
LABOR MARKET ADJUSTMENT
dc.subject
LABOR MARKET OUTCOME
dc.subject
LABOR MARKETS
dc.subject
LABOR POLICY
dc.subject
LABOR PRODUCTIVITY
dc.subject
LINES OF CREDIT
dc.subject
LIQUIDITY
dc.subject
MACROECONOMIC POLICIES
dc.subject
MACROECONOMIC STABILITY
dc.subject
MANUFACTURERS
dc.subject
MARGINAL COST
dc.subject
MONEY LENDERS
dc.subject
MULTIPLIERS
dc.subject
NEW BUSINESS
dc.subject
OPTIMIZATION
dc.subject
OWNERSHIP STRUCTURE
dc.subject
PERMANENT EMPLOYMENT
dc.subject
PERMANENT WORKERS
dc.subject
POOR ACCESS
dc.subject
PREVIOUS SECTION
dc.subject
PRIVATE COMMERCIAL BANKS
dc.subject
PROBIT REGRESSION
dc.subject
PRODUCTION CAPACITY
dc.subject
PRODUCTION WORKERS
dc.subject
PRODUCTIVE FIRMS
dc.subject
PRODUCTIVITY
dc.subject
PRODUCTIVITY DISTRIBUTION
dc.subject
PRODUCTIVITY LEVELS
dc.subject
REAL ESTATE
dc.subject
RETAINED EARNINGS
dc.subject
SAFETY NETS
dc.subject
SAVINGS
dc.subject
SKILL TYPE
dc.subject
SKILLED WORKERS
dc.subject
SOCIAL SAFETY NETS
dc.subject
SUPPLIERS
dc.subject
TEMPORARY WORKERS
dc.subject
TOTAL COSTS
dc.subject
TOTAL EMPLOYMENT
dc.subject
TOTAL FACTOR PRODUCTIVITY
dc.subject
TRADE CREDIT
dc.subject
UNSKILLED LABOR
dc.subject
UNSKILLED WORKERS
dc.subject
VALUE ADDED
dc.subject
VILLAGE
dc.subject
WAGE SUBSIDIES
dc.subject
WAGES
dc.subject
WORKER
dc.subject
WORKERS
dc.subject
WORKING CAPITAL
dc.title
Weathering the Storm : Responses by Cambodian Firms to the Global Financial Crisis
en
okr.crosscuttingsolutionarea
Jobs
okr.date.disclosure
2012-10-01
okr.doctype
Publications & Research :: Policy Research Working Paper
okr.doctype
Publications & Research
okr.docurl
http://documents.worldbank.org/curated/en/2012/10/16812612/weathering-storm-responses-cambodian-firms-global-financial-crisis
okr.globalpractice
Macroeconomics and Fiscal Management
okr.globalpractice
Social Protection and Labor
okr.globalpractice
Finance and Markets
okr.googlescholar.linkpresent
yes
okr.identifier.doi
10.1596/1813-9450-6220
okr.identifier.externaldocumentum
000158349_20121009142618
okr.identifier.internaldocumentum
16812612
okr.identifier.report
WPS6220
okr.language.supported
en
okr.pdfurl
http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/10/09/000158349_20121009142618/Rendered/PDF/wps6220.pdf
en
okr.region.administrative
East Asia and Pacific
okr.topic
Social Protections and Labor :: Labor Markets
okr.topic
Finance and Financial Sector Development :: Microfinance
okr.topic
Banks and Banking Reform
okr.topic
Economic Theory and Research
okr.topic
Finance and Financial Sector Development :: Access to Finance
okr.topic
Macroeconomics and Economic Growth
okr.unit
Development Research Group (DECRG)
okr.volume
1 of 1

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