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Firm Exports and Multinational Activity Under Credit Constraints

Kalina Manova, Shang-Jin Wei and Zhiwei Zhang
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Zhiwei Zhang: Nomura Securities

The Review of Economics and Statistics, 2015, vol. 97, issue 3, 574-588

Abstract: We provide firm-level evidence that credit constraints restrict international trade and affect the pattern of multinational activity. We show that foreign affiliates and joint ventures in China have better export performance than private domestic firms in financially more vulnerable sectors. These results are stronger for destinations with higher trade costs and not driven by firm size or other sector characteristics. Our findings are consistent with multinational subsidiaries being less liquidity constrained because they can access foreign capital markets or funding from their parent company. They further suggest that FDI can alleviate the impact of domestic financial market imperfections on trade.

Keywords: exports; firm exports; multinational activity; credit; credit constraints; China; foreign markets (search for similar items in EconPapers)
JEL-codes: F13 F14 (search for similar items in EconPapers)
Date: 2015
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Working Paper: Firm Exports and Multinational Activity Under Credit Constraints (2011) Downloads
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