Financial Factors and the Margins of Trade: Evidence from Cross-Country Firm-Level Data

Nicolas Berman () and Jérôme Héricourt

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: Using a large cross-country, firm level database containing 5,000 firms in 9 developing and emerging economies, we study how financial factors affect both firms' export decisions and the amount exported by firm. First, our results stress an important impact of firms' access to finance on their entry decision into the export market. However, a better financial health neither increases the probability of remaining an exporter once the firm has entered, nor the size of exports. Second, we find that financial constraints create a disconnection between firms' productivity and their export status: productivity is a significant determinant of exporting decision only if the firm has a sufficient access to external finance. Finally, an increase in a country's financial development dampens this disconnection, thus acting positively both on the number of exporters and on the exporters' selection process. These results contribute to the literature documenting the role of fixed cost and of the extensive margin of trade in total trade adjustment, and provide micro evidence of the positive impact of financial development on trade found by previous literature.

Keywords: Export decision; margins of trade; financial constraints (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Date: 2008-09
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00321632/en/

Downloads: (external link)
http://halshs.archives-ouvertes.fr/docs/00/32/16/32/PDF/Bla08050.pdf (application/pdf)

Related works:
Working Paper: Financial factors and the margins of trade: evidence from cross-country firm-level data (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:hal:cesptp:halshs-00321632_v1

Access Statistics for this paper

More papers in Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL
Series data maintained by CCSD ().