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Exporters, Importers and Credit Constraints

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  • Mirabelle Muûls

Abstract

This paper analyses the interaction between credit constraints and trading behaviour. I construct a unique dataset containing firm-level trade transactions data, balance sheets and credit scores from an independent credit insurance company for Belgian manufacturing firms between 1999 and 2007. Firms are more likely to be exporting or importing if they enjoy lower credit constraints. Also, firms that have better credit rating export and import more, and more products to and from more countries. Whilst importing and exporting behavior are very similar in a static view, an analysis of how various margins of trade are related to credit constraints show a significant difference between the two. In the case of exports, it is the extensive margin of exports in terms of destinations that is significantly associated with credit constraints whereas for imports it is the extensive margin in terms of products.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp1169.

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Date of creation: Oct 2012
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Handle: RePEc:cep:cepdps:dp1169

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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Keywords: Credit constraints; international trade; firms’ heterogeneity; imports; exports;

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References

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Cited by:
  1. Wagner, Joachim, 2013. "Credit constraints and exports: A survey of empirical studies using firm level data," Working Paper Series in Economics and Institutions of Innovation 334, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  2. Wagner, Joachim, 2014. "Credit constraints and margins of import: First evidence for German manufacturing enterprises," Working Paper Series in Economics and Institutions of Innovation 344, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.

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