Debt Financing and Manufacturing Firms’ Decision to Export: Evidence from Ghana

Adequate financial health indeed accelerates the entry of firms into the export market. Many firms, already in the market, have also fizzled out of export market completely due to lack of finance. It is quiet obverse that debt financing influences not only firm’s performance but also firm’s decision export. Hence, evaluating the relationship between debt financing and manufacturing firms’ decision to export from Ghana have relevant policy implication in the context of developing country. To effectively address the objectives, the study employed the probit model on 377 manufacturing firms obtained from the World Bank Enterprise Survey data (Ghana). The study found that debt financing positively influences the decision to export. In other words, an increase in debt financing increases the firm’s probability of exporting in Ghana. Whiles female top managers are less likely to export than their male counterparts, firms with large workforce are more likely to export. Firms with experienced top managers are also likely to export their products. In terms of location, firms in Tema exports more than firms in Accra and Takoradi. The study recommends that the financial market of Ghana be developed to enable manufacturing firms’ source more external funds in the form of debt finance to enable them export.