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Credit constraints, firm exports and financial development: Evidence from developing countries

Dario Fauceglia ()

The Quarterly Review of Economics and Finance, 2015, vol. 55, issue C, 53-66

Abstract: This paper examines whether financial development reduces the impact of credit constraints on the exporting decision using firm-level data across 17 developing countries. We approximate credit constraints by a firm's liquidity ratio. In line with a Melitz-type model with borrowing frictions, the regression analysis confirms that the positive effect of a firm's liquidity on the exporting probability is larger for firms located in financially less developed countries. This result highlights the importance of financial development in reducing credit constraints. The empirical results also suggest that financing obstacles and the benefits from better access to finance are particularly high for firms belonging to innovative sectors dependent on external finance.

Keywords: International trade; Financial development; Credit constraints; Export margins (search for similar items in EconPapers)
JEL-codes: F10 F12 F14 G20 (search for similar items in EconPapers)
Date: 2015
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