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Financial constraints as a barrier to export participation

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  • Flora Bellone

    (University of Nice)

  • Patrick Musso

    (CNRS)

  • Lionel Nesta

    (Observatoire Français des Conjonctures Économiques)

  • Stefano Schiavo

    (University of Trento)

Abstract

The paper analyzes the link between financial constraints and firms' export decisions, using a large micro-level data set on French manufacturing firms over the 1996-2004 period. Our main finding is that firms enjoying better ex-ante financial heath are more likely to start exporting. This results contrasts with the previous empirical literature which found evidence that participation to exports market improves a firm financial health but not that export starters display specific ex-ante financial advantages. By contrast, our result supports the view that financial constraints act as a barrier to export participation. 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.

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Bibliographic Info

Paper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number 2008-29.

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Date of creation: 2008
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Handle: RePEc:fce:doctra:0829

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Citations

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Cited by:
  1. Tim Schmidt-Eisenlohr, 2011. "Towards a Theory of Trade Finance," CESifo Working Paper Series 3414, CESifo Group Munich.
  2. Alexander Eickelpasch & Alexander Vogel, 2009. "Determinants of Export Behaviour of German Business Services Companies," Discussion Papers of DIW Berlin 876, DIW Berlin, German Institute for Economic Research.
  3. Görg, Holger & Spaliara, Marina-Eliza, 2010. "Financial health, exports, and firm survival: A comparison of British and French firms," Open Access Publications from Kiel Institute for the World Economy 37273, Kiel Institute for the World Economy (IfW).
  4. Strasser, Georg, 2013. "Exchange rate pass-through and credit constraints," Journal of Monetary Economics, Elsevier, vol. 60(1), pages 25-38.
  5. Halldin, Torbjörn, 2012. "External finance, collateralizable assets and export market entry," Working Paper Series in Economics and Institutions of Innovation 268, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  6. Georg H. Strasser, 2011. "Exchange Rate Pass-Through and Credit Constraints: Firms Price to Market as Long as They Can," Boston College Working Papers in Economics 788, Boston College Department of Economics, revised 13 Feb 2012.

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