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Financial Constraints and Exports: Evidence from Chinese Firms

Author

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  • Peter Egger
  • Michaela Kesina

Abstract

This article assesses the role of credit constraints for exports at the firm level. Theoretical models by Chaney, Manova, and others suggest that credit constraints are detrimental for exports. We examine this hypothesis empirically at the firm level by using data on Chinese enterprises compiled by the National Bureau of Statistics of China. We approximate credit constraints by financial variables such as a firm's debt ratio or the liquid-to-total-capital ratio. We then consider the impact of these financial fundamentals on the extensive and the intensive margins of firm-level exports. In particular, we focus on the impact of credit constraints on a firm's propensity to export at all (which we model by means of a logit model) and on a firm's export--sales ratio (which we model by a fractional response model based on Papke and Wooldridge (1996 Journal of Applied Econometrics 11, 619--32). The empirical results confirm the negative relationship between exports and credit constraints suggested by previous theoretical work. Credit constrained firms are less likely to be exporters and have lower export quotas. The results are robust when using alternative explanatory variables and including further explanatory variables. (JEL Codes: F14; G32) Copyright The Author 2013. Published by Oxford University Press on behalf of Ifo Institute, Munich. All rights reserved. For permissions, please email: journals.permissions@oup.com, Oxford University Press.

Suggested Citation

  • Peter Egger & Michaela Kesina, 2013. "Financial Constraints and Exports: Evidence from Chinese Firms," CESifo Economic Studies, CESifo, vol. 59(4), pages 676-706, December.
  • Handle: RePEc:oup:cesifo:v:59:y:2013:i:4:p:676-706
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    File URL: http://hdl.handle.net/10.1093/cesifo/ifs036
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    Citations

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    Cited by:

    1. Joachim Wagner, 2014. "Credit constraints and exports: evidence for German manufacturing enterprises," Applied Economics, Taylor & Francis Journals, vol. 46(3), pages 294-302, January.
    2. repec:bla:worlde:v:40:y:2017:i:12:p:2854-2874 is not listed on IDEAS
    3. Deniz Baglan & Hakan Yilmazkuday, 2016. "Financial Health and the Intensive Margin of Trade," Working Papers 1607, Florida International University, Department of Economics.
    4. Natasha Agarwal & Chris Milner & Alejandro Riaño, "undated". "Credit Constraints and FDI Spillovers in China," Discussion Papers 11/21, University of Nottingham, GEP.
    5. David Kohn & Fernando Leibovici & Michal Szkup, 2016. "Financial Frictions And New Exporter Dynamics," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57, pages 453-486, May.
    6. Yothin Jinjarak & Paulo Jose Mutuc & Ganeshan Wignaraja, 2014. "Does Finance Really Matter for the Participation of SMEs in International Trade? Evidence from 8,080 East Asian Firms," Trade Working Papers 24047, East Asian Bureau of Economic Research.
    7. Michal Szkup & Fernando Leibovici & David Kohn, 2011. "Financial Frictions and Export Dynamics," 2011 Meeting Papers 1014, Society for Economic Dynamics.
    8. Joachim Wagner, 2015. "Credit constraints and margins of import: first evidence for German manufacturing enterprises," Applied Economics, Taylor & Francis Journals, vol. 47(5), pages 415-430, January.
    9. Spyros Arvanitis & Florian Seliger, 2014. "Imitation versus innovation," KOF Working papers 14-367, KOF Swiss Economic Institute, ETH Zurich.
    10. Silvio Contessi & Francesca de Nicola, 2012. "What do we know about the relationship between access to finance and international trade?," Working Papers 2012-054, Federal Reserve Bank of St. Louis.
    11. repec:bla:worlde:v:40:y:2017:i:11:p:2328-2353 is not listed on IDEAS
    12. Besedeš, Tibor & Kim, Byung-Cheol & Lugovskyy, Volodymyr, 2014. "Export growth and credit constraints," European Economic Review, Elsevier, vol. 70(C), pages 350-370.
    13. Wagner, Joachim, 2015. "Credit constraints and the extensive margins of exports: First evidence for German manufacturing," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 9, pages 1-17.
    14. Fauceglia, Dario, 2015. "Credit constraints, firm exports and financial development: Evidence from developing countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 55(C), pages 53-66.
    15. repec:bla:reviec:v:25:y:2017:i:3:p:476-499 is not listed on IDEAS
    16. Raffaello Bronzini & Alessio D'Ignazio, 2017. "Bank Internationalization and Firm Exports: Evidence from Matched Firm–Bank Data," Review of International Economics, Wiley Blackwell, vol. 25(3), pages 476-499, August.
    17. repec:eco:journ1:2018-01-22 is not listed on IDEAS

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • 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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