Financial Constraints and Firm Export Behavior

Flora Bellone (), Patrick Musso (), Lionel Nesta and Stefano Schiavo

No 816, Department of Economics Working Papers from Department of Economics, University of Trento, Italia

Abstract: The paper analyzes the link between financial constraints and firm export behavior. Our main finding is that firms enjoying better financial health are more likely to become exporters. The result contrasts with the previous empirical literature which found evidence that export participation improves firm financial health, but not that export starters display any ex-ante financial advantage. On the contrary, we find that financial constraints act as a barrier to export participation. Better access to external financial resources increases the probability to start exporting and also shortens the time before firms decide to serve foreign customers. This finding has important policy implications as it suggests that, in presence of financial markets imperfections, public intervention can be called for to help efficient but financially constrained firms to overcome the sunk entry costs into export markets and expand their activities abroad.

Keywords: Export; Firm heterogeneity; Financial constraints; Sunk costs (search for similar items in EconPapers)
JEL-codes: D92 F14 G32 L25 (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-bec
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Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Financial Constraints and Firm Export Behaviour (2010)
Working Paper: Financial Constraints and Firm Export Behavior (2010)
Working Paper: Financial Constraints and Firm Export Behavior (2010)
Working Paper: Financial Constraints and Firm Export Behavior (2009)
Working Paper: Financial Constraints and Firm Export Behavior (2009)
Working Paper: Financial Constraints and Firm Export Behavior (2008)
Working Paper: Financial Constraints and Firm Export Behavior (2008)
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