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Exporting, Capital Investment and Financial Constraints

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  • Vlad Manole
  • Mariana Spatareanu

Abstract

Many firms cite financial constraints as some of the most important impediments to their investment and growth. Using a unique data set from the Czech Republic this paper investigates the importance of financing constraints in the context of exporters. It finds that exporters are less financially constrained than non-exporters. However, after carefully correcting for possible endogeneity and selection issues, the evidence points to less constrained firms self-selecting into exporting rather than exporting alleviating firms' financial constraints. The analysis suggests that easing firms' credit constraints may play an important role in facilitating exporting and that welldeveloped financial markets that would decrease firms' cost of external finance may be needed in order to benefit from selling in foreign markets.

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File URL: http://www.econ.kuleuven.be/licos/publications/dp/dp252.pdf
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Bibliographic Info

Paper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 25209.

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Date of creation: 2009
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Handle: RePEc:lic:licosd:25209

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Keywords: exporting; cash flow; financial constraints;

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References

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  1. Gelos, R. Gaston & Werner, Alejandro M., 2002. "Financial liberalization, credit constraints, and collateral: investment in the Mexican manufacturing sector," Journal of Development Economics, Elsevier, vol. 67(1), pages 1-27, February.
  2. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  3. Bernard, A., 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," Working papers 97-21, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. Beck, T.H.L., 2003. "Financial dependence and international trade," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3125509, Tilburg University.
  5. Lubomir Lizal & Jan Svejnar, 2001. "Investment, Credit Rationing and the Soft Budget Constraint: Evidence from Czech Panel Data," William Davidson Institute Working Papers Series 363, William Davidson Institute at the University of Michigan.
  6. Thorsten Beck & Ross Levine, 2002. "Industry Growth and Capital Allocation: Does Having a Market- or Bank-Based System Matter?," NBER Working Papers 8982, National Bureau of Economic Research, Inc.
  7. Campa, Jose M. & Shaver, J. Myles, 2002. "Exporting and capital investment: On the strategic behavior of exporters," IESE Research Papers D/469, IESE Business School.
  8. Steven M. Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 2000. "Financing Constraints and Corporate Investment: Response to Kaplan and Zingales," NBER Working Papers 5462, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Joachim Wagner, 2012. "Credit constraints and exports: Evidence for German manufacturing enterprises," Working Paper Series in Economics 251, University of Lüneburg, Institute of Economics.
  2. Armando Silva, 2011. "Financial constraints and exports: evidence from Portuguese manufacturing firms," FEP Working Papers 402, Universidade do Porto, Faculdade de Economia do Porto.
  3. repec:hal:journl:halshs-00677343 is not listed on IDEAS
  4. Askenazy, Ph. & Caldera, A. & Gaulier, G. & Irac, D., 2011. "Financial Constraints and Foreign Market Entries or Exits: Firm-Level Evidence from France," Working papers 328, Banque de France.
  5. 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.
  6. Emanuele Forlani, 2010. "Liquidity Constraints and Firm’s Export Activity," Development Working Papers 291, Centro Studi Luca d\'Agliano, University of Milano, revised 30 Apr 2010.
  7. Filipe Silva & Carlos Carreira, 2011. "Financial Constraints and Exports: An Analysis of Portuguese Firms During the European Monetary Integration," Notas Económicas, Faculdade de Economia, Universidade de Coimbra, issue 34, pages 35-56, December.
  8. Juan A. Máñez & María E. Rochina-Barrachina & Juan A. Sanchis-Llopis & Oscar Vicente, 2013. "Financial constraints and Spanish manufacturing firms’ R&D and exporting," Working Papers 1324, Department of Applied Economics II, Universidad de Valencia.
  9. Saeed Abubakr & Franco Esposito, 2012. "Bank concentration and financial constraints on firm investment in UK," Studies in Economics and Finance, Emerald Group Publishing, vol. 29(1), pages 11-25, March.
  10. Pauline Bourgeon & Jean-Charles Bricongne & Guillaume Gaulier, 2012. "Financing time to trade : Evidence from French firms," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00677343, HAL.

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