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

Nicolas Berman () and Jérôme Héricourt
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Nicolas Berman: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, EUI - European University Institute - Institut Universitaire Européen

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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; Décision d'exporter; marges de commerce; contraintes financières (search for similar items in EconPapers)
Date: 2008-09
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00321632v1
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Citations: View citations in EconPapers (3)

Published in 2008

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Related works:
Journal Article: Financial factors and the margins of trade: Evidence from cross-country firm-level data (2010)
Working Paper: Financial Factors and the Margins of Trade: Evidence from Cross-Country Firm-Level Data (2008)
Working Paper: Financial factors and the margins of trade: evidence from cross-country firm-level data (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00321632

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