Overseas Market Information and Firms' Export Decisions

18 Pages Posted: 14 May 2015

See all articles by Tomohiko Inui

Tomohiko Inui

Gakushuin University

Keiko Ito

Senshu University - School of Economics

Daisuke Miyakawa

Hitotsubashi University

Date Written: July 2015

Abstract

This paper examines how firms’ decision to start exporting is affected by the availability of information on export markets. Unlike existing studies that focus on information sharing among firms, we are interested in the information provided by firms’ main bank. Specifically, using a unique data set containing information on both Japanese firms’ export activities and the experience of their main bank (i.e., their top lender bank) in transacting with other exporting firms, we examine whether main banks act as a conduit of information on export markets. We find that information spillovers through main banks positively affect client firms’ decision to start exporting (extensive margin), implying that information on foreign markets provided by banks substantially reduces the fixed entry cost of exporting. On the other hand, we do not find any evidence that information provided by banks has an effect on the export volume or on the growth rate of exports (intensive margin). Our results highlight that channels of information spillovers other than those examined in the literature so far may be of considerable importance.

JEL Classification: F10, F14, G21

Suggested Citation

Inui, Tomohiko and Ito, Keiko and Miyakawa, Daisuke, Overseas Market Information and Firms' Export Decisions (July 2015). Economic Inquiry, Vol. 53, Issue 3, pp. 1671-1688, 2015. Available at SSRN: https://ssrn.com/abstract=2605239 or http://dx.doi.org/10.1111/ecin.12211

Tomohiko Inui (Contact Author)

Gakushuin University ( email )

1-5-1 Mejiro
Toshima-ku Tokyo 171-8588
United States

Keiko Ito

Senshu University - School of Economics ( email )

Kanagawa 214-8580
Japan

Daisuke Miyakawa

Hitotsubashi University ( email )

2-1 Naka Kunitachi-shi
Tokyo 186-8601
Japan

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