Firms'Export Decisions: Demand Trumps Financial Shocks

28 Pages Posted: 26 Jan 2017 Last revised: 2 Aug 2019

Date Written: January 25, 2017

Abstract

This paper studies the relationship between access to credit, demand shocks, and export market adjustments using firm-level panel survey data for 24 economies in the Eastern Europe and Central Asian region. The study finds that domestic shocks to demand have a significant influence on the firm's decision to participate in international markets (extensive margin) and on the firm's share of foreign sales (intensive margin). Foreign shocks to demand only affect the firm's share of foreign sales. Conversely, the role of financial constraints on either the extensive or the intensive margin is more nuanced. The results are robust to various specifications of financial constraints and different estimation methods.

Keywords: International Trade and Trade Rules, Trade and Services, Common Carriers Industry, Food & Beverage Industry, Textiles, Apparel & Leather Industry, Pulp & Paper Industry, Business Cycles and Stabilization Policies, General Manufacturing, Plastics & Rubber Industry, Construction Industry, Transport Services, Early Child and Children & #39, Early Child and Children's Health, Reproductive Health

Suggested Citation

de Nicola, Francesca and Tan, Shawn Weiming, Firms'Export Decisions: Demand Trumps Financial Shocks (January 25, 2017). World Bank Policy Research Working Paper No. 7953, Available at SSRN: https://ssrn.com/abstract=2906104

Francesca De Nicola (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Shawn Weiming Tan

Independent

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