Firm Exports and Multinational Activity Under Credit Constraints
AbstractThis paper provides firm-level evidence that credit constraints restrict international trade flows and affect the sectoral pattern of multinational activity. Using detailed customs data from China, we show that foreign affiliates and joint ventures have better export performance than private domestic firms in financially more vulnerable sectors. These results are stronger for destinations with higher trade costs and not driven by variation in firm size or by other sector determinants of FDI. Our findings are consistent with multinational subsidiaries being less liquidity constrained because they can tap additional funding from their parent company and/or access foreign capital markets. More broadly, they suggest that FDI can alleviate the impact of domestic financial market imperfections on aggregate growth, trade and private sector development.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16905.
Date of creation: Mar 2011
Date of revision:
Publication status: published as “Firm Exports and Multinational Activity under Credit Constraints” Review of Economics and Statistics (forthcoming). (with Shang-Jin Wei and Zhiwei Zhang)
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Find related papers by JEL classification:
- 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
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
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- Sandra Poncet & JÃ©rÃ´me HÃ©ricourt, 2009.
"FDI and credit constraints: firm level evidence from China,"
UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers)
- HÃ©ricourt, JÃ©rÃ´me & Poncet, Sandra, 2009. "FDI and credit constraints: Firm-level evidence from China," Economic Systems, Elsevier, Elsevier, vol. 33(1), pages 1-21, March.
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