Financial Constraints and Firm Export Behaviour
GREDEG-CNRS ; ISEM-University of Nice-Sophia-Antipolis
affiliation not provided to SSRN
University of Sussex
Università degli Studi di Trento - Department of Economics; OFCE
World Economy, Vol. 33, Issue 3, pp. 347-373, March 2010
The paper analyses the link between financial constraints and firm export behaviour. Our main finding is that firms enjoying better financial health are more likely to become exporters. The result contrasts with the previous empirical literature which found evidence that export participation improves firm financial health, but not that export starters display any ex ante financial advantage. On the contrary, we find that financial constraints act as a barrier to export participation. Better access to external financial resources increases the probability to start exporting and also shortens the time before firms decide to serve foreign customers. This finding has important policy implications as it suggests that, in the presence of financial market imperfections, public intervention can be called for to help efficient but financially constrained firms to overcome the sunk entry costs into export markets and expand their activities abroad.
Number of Pages in PDF File: 27Accepted Paper Series
Date posted: March 23, 2010
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