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

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dc.creatorGuimbert, Stephane
dc.creatorOostendorp, Remco
dc.date2013-01-03T17:52:01Z
dc.date2013-01-03T17:52:01Z
dc.date2012-10
dc.date.accessioned2026-07-01T01:02:01Z
dc.descriptionFirms 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.
dc.formatapplication/pdf
dc.formattext/plain
dc.identifierhttp://documents.worldbank.org/curated/en/2012/10/16812612/weathering-storm-responses-cambodian-firms-global-financial-crisis
dc.identifierhttps://hdl.handle.net/10986/12064
dc.identifierhttps://doi.org/10.1596/1813-9450-6220
dc.identifier.urihttp://hdl.handle.net/123456789/414473
dc.languageEnglish
dc.languageen_US
dc.publisherWorld Bank, Washington, DC
dc.relationPolicy Research Working Paper; No. 6220
dc.rightsCC BY 3.0 IGO
dc.rightshttp://creativecommons.org/licenses/by/3.0/igo/
dc.rightsWorld Bank
dc.subjectACCESS TO CREDIT
dc.subjectACCESS TO FINANCE
dc.subjectACCESS TO FORMAL FINANCE
dc.subjectADJUSTMENT COST
dc.subjectADJUSTMENT COSTS
dc.subjectAGRICULTURE
dc.subjectAVAILABILITY OF FINANCE
dc.subjectBANKRUPTCIES
dc.subjectBANKRUPTCY
dc.subjectBARGAINING POWER
dc.subjectBRANCHES
dc.subjectBUSINESS ENVIRONMENT
dc.subjectCAPITAL MARKET
dc.subjectCAPITAL MARKETS
dc.subjectCAPITAL REGULATION
dc.subjectCAPITAL REQUIREMENTS
dc.subjectCAPITAL STOCK
dc.subjectCOMMERCIAL BANKS
dc.subjectCONSUMPTION SMOOTHING
dc.subjectCORPORATE PERFORMANCE
dc.subjectCREATIVE DESTRUCTION
dc.subjectCREDIT CONSTRAINED FIRM
dc.subjectCREDIT CONSTRAINED FIRMS
dc.subjectCREDIT CONSTRAINT
dc.subjectCREDIT CONSTRAINTS
dc.subjectCREDIT CRUNCH
dc.subjectDEVELOPMENT ECONOMICS
dc.subjectDEVELOPMENT POLICY
dc.subjectDRIVERS
dc.subjectEARNINGS
dc.subjectECONOMIC CRISES
dc.subjectECONOMIC CRISIS
dc.subjectECONOMIC POLICY
dc.subjectECONOMIC SHOCKS
dc.subjectELASTICITY
dc.subjectEMPLOYMENT
dc.subjectEMPLOYMENT GROWTH
dc.subjectEMPLOYMENT IMPACT
dc.subjectEXPORTS
dc.subjectEXTERNAL FINANCE
dc.subjectFACTOR DEMAND
dc.subjectFINANCIAL CRISIS
dc.subjectFINANCIAL DEVELOPMENT
dc.subjectFINANCIAL INSTITUTION
dc.subjectFINANCIAL POLICY
dc.subjectFINANCIAL SECTOR
dc.subjectFINANCIAL SECTOR DEVELOPMENT
dc.subjectFINANCING NEED
dc.subjectFIRM LEVEL
dc.subjectFIRM PERFORMANCE
dc.subjectFIRM PRODUCTIVITY
dc.subjectFIRM SIZE
dc.subjectFIRM SURVEY
dc.subjectFIRM SURVEYS
dc.subjectFIXED COST
dc.subjectFIXED COSTS
dc.subjectGDP
dc.subjectHOUSEHOLDS
dc.subjectID
dc.subjectINEQUALITY
dc.subjectINFLATION
dc.subjectINFLATION RATE
dc.subjectINFORMAL FINANCE
dc.subjectINPUT PRICES
dc.subjectINSURANCE
dc.subjectINTERNATIONAL BANK
dc.subjectINVENTORIES
dc.subjectINVENTORY
dc.subjectINVESTMENT DECISIONS
dc.subjectLABOR DEMAND
dc.subjectLABOR MARKET
dc.subjectLABOR MARKET ADJUSTMENT
dc.subjectLABOR MARKET OUTCOME
dc.subjectLABOR MARKETS
dc.subjectLABOR POLICY
dc.subjectLABOR PRODUCTIVITY
dc.subjectLINES OF CREDIT
dc.subjectLIQUIDITY
dc.subjectMACROECONOMIC POLICIES
dc.subjectMACROECONOMIC STABILITY
dc.subjectMANUFACTURERS
dc.subjectMARGINAL COST
dc.subjectMONEY LENDERS
dc.subjectMULTIPLIERS
dc.subjectNEW BUSINESS
dc.subjectOPTIMIZATION
dc.subjectOWNERSHIP STRUCTURE
dc.subjectPERMANENT EMPLOYMENT
dc.subjectPERMANENT WORKERS
dc.subjectPOOR ACCESS
dc.subjectPREVIOUS SECTION
dc.subjectPRIVATE COMMERCIAL BANKS
dc.subjectPROBIT REGRESSION
dc.subjectPRODUCTION CAPACITY
dc.subjectPRODUCTION WORKERS
dc.subjectPRODUCTIVE FIRMS
dc.subjectPRODUCTIVITY
dc.subjectPRODUCTIVITY DISTRIBUTION
dc.subjectPRODUCTIVITY LEVELS
dc.subjectREAL ESTATE
dc.subjectRETAINED EARNINGS
dc.subjectSAFETY NETS
dc.subjectSAVINGS
dc.subjectSKILL TYPE
dc.subjectSKILLED WORKERS
dc.subjectSOCIAL SAFETY NETS
dc.subjectSUPPLIERS
dc.subjectTEMPORARY WORKERS
dc.subjectTOTAL COSTS
dc.subjectTOTAL EMPLOYMENT
dc.subjectTOTAL FACTOR PRODUCTIVITY
dc.subjectTRADE CREDIT
dc.subjectUNSKILLED LABOR
dc.subjectUNSKILLED WORKERS
dc.subjectVALUE ADDED
dc.subjectVILLAGE
dc.subjectWAGE SUBSIDIES
dc.subjectWAGES
dc.subjectWORKER
dc.subjectWORKERS
dc.subjectWORKING CAPITAL
dc.titleWeathering the Storm : Responses by Cambodian Firms to the Global Financial Crisis

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