Focusing on a threshold regression analysis, the result provides new evidence that the negative effect of exchange rate depreciation on exports takes place as certain threshold level of credit market imperfection has been attained.

Malaysia’s merchandise trade flows between 1990-1997 is decomposed into intraindustry trade (IIT) and net trade (NT). NT is further decomposed into net exports and net imports to evaluate the changing structure of trade on the merchandise trade balance. The Grubel-Lloyd (GL) index was used to...