Disparities in Net Income Growth of Russian Companies Facing Crisis and Heightened Exchange Rate Volatility
Disparities in Net Income Growth of Russian Companies Facing Crisis and Heightened Exchange Rate Volatility

Summary/Abstract: This paper aims to compare net income growth per employee in exporting and non-exporting Russian companies, addressing a gap in understanding this issue during crisis periods. Binary treatment models were applied to 1,600 Russian firms, utilizing data from EFIGE (European Firms in a Global Economy) and Amadeus databases. We used an estimation approach that permits a heterogeneous average treatment effect under the assumption of the endogeneity of the treatment variable. Since exporting and profitability can be caused by firms’ unobserved characteristics, we employed instrumental-variables estimators and a generalized two-step regression fitted by probit and two-stage least squares methods to obtain consistent estimation of average treatment effects. Our research found that exporters, in general, do not achieve higher productivity. The practical outcomes of the research could be beneficial, especially considering the impact of crisis outbreaks and changes in the trade directions of Russian exporting firms due to Western sanctions.

• Details
• Contents