Firm financing, frictions, and trade

José L. Groizard and Fernando Riveiro

Chapter 14 in Elgar Encyclopedia of International Trade, 2026, pp 64-69 from Edward Elgar Publishing

Abstract: This entry reviews recent empirical and theoretical research on the relationship between firms’ access to financial resources and their export behavior, both at the firm and aggregate levels. Empirical studies consistently document a positive relationship between external financing and firms’ export decisions, highlighting the role of credit constraints and debt maturity in shaping export intensity, entry into export markets, and indirect exporting. Similar trade and finance patterns are observed in industry- and aggregate-level data. To explain these findings, the theoretical literature on trade and finance has evolved from standard sunk-cost models to incorporate heterogeneous agents and various forms of borrowing constraints. These heterogeneous-firms models capture observed firm-level dynamics related to finance and trade. As such, this framework offers a promising foundation for analyzing firm behavior and evaluating the aggregate effects of trade and financial policies.

Keywords: Firm dynamics; New exporters; Export intensity; Credit constraints; Firm-level data; Trade policy (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035327492
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