Table 6: The three main channels: The role of active stock markets

||(1)|(2)|(3)|(4)|(5)|(6)|(7)|(8)|(9)|
|---|---|---|---|---|---|---|---|---|---|
|Dep. var.: Survival|1y|5y|10y|1y|5y|10y|1y|5y|10y|
|investment needs _×_ banks|0.006|0.036|0.065<sup>_b_</sup>|||||||
||(0.050)|(0.035)|(0.028)|||||||
|investment needs _×_ stock market turnover|0.043<br>(0.037)|0.015<br>(0.028)|0.025<br>(0.021)|||||||
|investment needs _×_ GDPpc|0.009|-0.004|-0.008|||||||
||(0.019)|(0.013)|(0.011)|||||||
|investment needs _×_ real exchange rate|-2.004<sup>_b_</sup><br>(0.925)|-0.684<br>(0.669)|-0.592<br>(0.562)|||||||
|liquidity needs _×_ banks||||0.065|0.061<sup>_b_</sup>|0.031||||
|||||(0.040)|(0.029)|(0.023)||||
|liquidity needs _×_ stock market turnover||||0.090<sup>_a_</sup>|0.066<sup>_a_</sup>|0.043<sup>_a_</sup>||||
|||||(0.026)|(0.021)|(0.015)||||
|liquidity needs _×_ GDPpc||||0.056<sup>_a_</sup>|0.035<sup>_a_</sup>|0.030<sup>_a_</sup>||||
|||||(0.014)|(0.013)|(0.010)||||
|liquidity needs _×_ real exchange rate||||-1.161|-0.384|-0.498||||
|||||(0.763)|(0.620)|(0.479)||||
|asset intangibility _×_ banks|||||||0.076|0.060|0.030|
||||||||(0.061)|(0.043)|(0.031)|
|asset intangibility _×_ stock market turnover|||||||0.099<sup>_a_</sup>|0.079<sup>_a_</sup>|0.045<sup>_b_</sup>|
||||||||(0.036)|(0.028)|(0.018)|
|asset intangibility _×_ GDPpc|||||||0.008|0.021|0.010|
||||||||(0.019)|(0.016)|(0.013)|
|asset intangibility _×_ real exchange rate|||||||-2.126<sup>_c_</sup>|-2.716<sup>_a_</sup>|-1.967<sup>_a_</sup>|
||||||||(1.160)|(0.859)|(0.660)|
|Observations|232,766|232,766|232,766|232,766|232,766|232,766|232,766|232,766|232,766|
|R-squared|0.259|0.549|0.700|0.260|0.549|0.701|0.259|0.549|0.701|
|Country-Time FE|yes|yes|yes|yes|yes|yes|yes|yes|yes|
|Product FE|yes|yes|yes|yes|yes|yes|yes|yes|yes|
|Full set of controls included|yes|yes|yes|yes|yes|yes|yes|yes|yes|

Dependent variable is the probability of export survival of product _k_ from industrial sector (industry) _i_ exported by country _c_ to the USA. Export survival probability is measured _l_ years after the beginning of export spell, with _l_ = 1 in columns (1), (4) and (7), _l_ = 5 in columns (2), (5) and (8), and _l_ = 10 in columns (3), (6) and (9). The regressions are estimated by OLS and contain a full set of fixed effects at the product level and the (exporting country)*time level, with time referring to the beginning of a given export spell. Stock market turnover is measured as the ratio between the value of stock market transactions and the stock market capitalization. Other variables are described in Table 2, Table 3, and Table 4. The full set of controls also includes initial export, total export, number of suppliers, multiple spell, and interaction terms between physical and human capital endowments of country _c_ and the corresponding capital intensities at the industry level. All time-varying explanatory variables are measured at the beginning of the export spell. Robust standard errors are clustered at the (exporting country)*time level, with time referring to the beginning of a given export spell. _a_ , _b_ , _c_ denote statistical significance at the 1%, 5%, and 10% level, respectively.

stock market turnover is insignificant across all time dimensions. This contrasts with the previous results for the size of stock markets that did promote export survival of these products at the longer term horizons of five and ten years (second and third columns of Table 5). While active stock markets do affect the real economy in other contexts (e.g., Levine and Zervos 1998, Manova 2008), our results suggest that they do not play a significant role in promoting the export survival of products with high investment needs.

Columns (4) to (6) of Table 6 focus on the role played by active stock markets in the export survival of products with high liquidity needs. In the previous specifications looking at large stock markets, banks dominated stock market capitalization in promoting the longer term export survival for these products (fifth and sixth columns of Table 5). The results are very different when looking at the activity of the stock market instead.

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