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Financing constraints and exports: evidence from India

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  • M. Padmaja

    (National Institute of Technology)

  • Subash Sasidharan

    (Indian Institute of Technology)

Abstract

This paper investigates the effect of financing constraints on the extensive and intensive margins of exports using a rich firm-level data on Indian manufacturing firms. Following the literature, we adopt liquidity ratio and leverage ratio as the measures of financing constraints and control for other firm-level factors. Controlling for initial conditions, endogeneity, and selection bias, we find that financing constraints have a significant impact on the extensive margin of exports. Using Propensity Score Matching –Differences in Differences approach, we find significant post-entry effects of exports on firm financial performance.

Suggested Citation

  • M. Padmaja & Subash Sasidharan, 2021. "Financing constraints and exports: evidence from India," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 45(1), pages 118-145, January.
    • Handle: RePEc:spr:jecfin:v:45:y:2021:i:1:d:10.1007_s12197-020-09532-6
    DOI: 10.1007/s12197-020-09532-6
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