The Role of Financial Constraints in Determining Export Status

Crt Kostevc

Zagreb International Review of Economics and Business, 2007, vol. 10, issue 2, 1-16

Abstract: In spite of the mounting evidence on the advantages of exporters over firms focused solely on their domestic markets, the source of these differences is yet to be explained. The present contribution analyzes the role of financial constraints as one of the key factors determining firm export status. Through a survey of existing literature and an empirical analysis of Slovenian manufacturing firms the role of financial constraints that limit foreign market access to only a subset of the firms is revealed. It is shown that financial constraints, even when other factors are explicitly considered, determine the firms that will be able to enter into foreign markets and financially constrained firms end up exporting less frequently and smaller quantities than could otherwise be expected.

Date: 2007
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