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Credit constraints and exports of SMEs in emerging and developing countries

Author

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  • Filomena Pietrovito

    (Universita’ degli Studi del Molise)

  • Alberto Franco Pozzolo

    (Universita’ degli Studi del Molise)

Abstract

We study the relationship between credit constraints and exports using a large and heterogeneous sample of small- and medium-sized firms from 65 emerging and developing countries between 2003 and 2014. We measure credit constraints by means of each firm’s self-assessment of whether it is credit-rationed, and we follow an instrumental variable approach that uses firm-level instruments to address the potential endogeneity of credit constraints with respect to export performance. We find robust evidence of a negative, statistically and economically significant effect of financial constraints on both the probability that a firm exports (the extensive margin) and the share of exports over total sales (the intensive margin). The impact on both margins of exports is stronger for small and young firms, and for those operating in countries where the financial system, the quality of institutions, and the overall level of economic freedom are less developed.

Suggested Citation

  • Filomena Pietrovito & Alberto Franco Pozzolo, 2021. "Credit constraints and exports of SMEs in emerging and developing countries," Small Business Economics, Springer, vol. 56(1), pages 311-332, January.
    • Handle: RePEc:kap:sbusec:v:56:y:2021:i:1:d:10.1007_s11187-019-00225-x
    DOI: 10.1007/s11187-019-00225-x
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    7. Choi, ByeongHwa, 2023. "The impact of financial development on innovation-based exports: Do all firms benefit equally?," The Quarterly Review of Economics and Finance, Elsevier, vol. 88(C), pages 81-100.
    8. Civelek Mehmet & Polách Jiří & Švihlíková Ilona & Paták Milan, 2022. "International Differences in the Perceptions of Export Obstacles By SMEs in the Same Firm-Level Characteristics: Evidence from European Countries," Folia Oeconomica Stetinensia, Sciendo, vol. 22(1), pages 18-45, June.
    9. Tonoyan, Vartuhi & Boudreaux, Christopher J., 2023. "Gender diversity in firm ownership: Direct and indirect effects on firm-level innovation across 29 emerging economies," Research Policy, Elsevier, vol. 52(4).
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    More about this item

    Keywords

    Export behavior; Export margins; Small business financing; Credit constraints;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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