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Do Financial Constraints Matter for Foreign Market Entry? – A Firm-Level Examination

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Author Info
Joel Stiebale ()

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Abstract

Recent theoretical and empirical contributions stress the importance of financial development for international trade. This paper investigates whether financial constraints matter for foreign market entry at the firm level using dynamic panel data techniques.The empirical framework is applied to a panel of French manufacturing firms over the years 1998–2005. Although financial indicators are significantly correlated with export status and export share, there is no evidence that financial constraints have a direct impact on foreign market participation or sales in foreign markets once observed and unobserved firm heterogeneity is controlled for. This result also holds for subgroups of firms that are more likely to face financial constraints and industries that are more dependent on financial factors.

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Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0051.

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Length: 42 pages
Date of creation: Jul 2008
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Handle: RePEc:rwi:repape:0051

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Related research
Keywords: Exports; financial constraints; sunk costs;

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Find related papers by JEL classification:
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
D92 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Firm Choice and Growth, Investment, or Financing
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data

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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Christian Arndt & Claudia M. Buch & Anselm Mattes, 2009. "Firm-Specific Factor Market Constraints and FDI: Evidence from Germany," Development Working Papers 269, Centro Studi Luca d\'Agliano, University of Milano. [Downloadable!]
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