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Access to banking finance and exporting

Author

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  • Roberto Álvarez
  • Ricardo A. López

Abstract

This article uses firm-level data for the period 1995–2002 to examine whether access to finance increases the probability of exporting of Chilean manufacturing plants. We exploit information on firms’ access to banking debt and changes in the real exchange rate (RER) to identify the causal effect of finance on exporting. This is an interesting case to study. The Chilean economy experienced a sustained RER depreciation since 1999, which increased export profitability. We use this episode as a quasi-experiment to study the impact of access to banking finance on exporting. Our results show that RER depreciations increase the probability of exporting for firms with access to banking finance and especially for firms in industries with higher financial needs. These results are robust to controlling for other firm characteristics affecting the probability of exporting and also for time varying industry-specific shocks that may affect export performance and banking finance.

Suggested Citation

  • Roberto Álvarez & Ricardo A. López, 2014. "Access to banking finance and exporting," Industrial and Corporate Change, Oxford University Press, vol. 23(6), pages 1523-1539.
  • Handle: RePEc:oup:indcch:v:23:y:2014:i:6:p:1523-1539.
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    File URL: http://hdl.handle.net/10.1093/icc/dtu031
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    References listed on IDEAS

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    1. Roberto Alvarez & Ricardo A. López, 2005. "Exporting and performance: evidence from Chilean plants," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 38(4), pages 1384-1400, November.
    2. Kalina Manova, 2013. "Credit Constraints, Heterogeneous Firms, and International Trade," Review of Economic Studies, Oxford University Press, vol. 80(2), pages 711-744.
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    4. Berman, Nicolas & Héricourt, Jérôme, 2010. "Financial factors and the margins of trade: Evidence from cross-country firm-level data," Journal of Development Economics, Elsevier, vol. 93(2), pages 206-217, November.
    5. Greenaway, David & Guariglia, Alessandra & Kneller, Richard, 2007. "Financial factors and exporting decisions," Journal of International Economics, Elsevier, vol. 73(2), pages 377-395, November.
    6. Rajan, Raghuram G & Zingales, Luigi, 1998. "Financial Dependence and Growth," American Economic Review, American Economic Association, vol. 88(3), pages 559-586, June.
    7. Mélise Jaud & Madina Kukenova, 2011. "Financial development and survival of African agri-food exports," Working Papers halshs-00586320, HAL.
    8. Robert C. Feenstra & Zhiyuan Li & Miaojie Yu, 2014. "Exports and Credit Constraints under Incomplete Information: Theory and Evidence from China," The Review of Economics and Statistics, MIT Press, vol. 96(4), pages 729-744, October.
    9. David Greenaway & Richard Kneller & Xufei Zhang, 2010. "The Effect of Exchange Rates on Firm Exports: The Role of Imported Intermediate Inputs," The World Economy, Wiley Blackwell, vol. 33(8), pages 961-986, August.
    10. Kalina Manova & Shang-Jin Wei & Zhiwei Zhang, 2015. "Firm Exports and Multinational Activity Under Credit Constraints," The Review of Economics and Statistics, MIT Press, vol. 97(3), pages 574-588, July.
    11. Minetti, Raoul & Zhu, Susan Chun, 2011. "Credit constraints and firm export: Microeconomic evidence from Italy," Journal of International Economics, Elsevier, vol. 83(2), pages 109-125, March.
    12. Ricardo A. López, 2009. "Do Firms Increase Productivity in Order to Become Exporters?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(5), pages 621-642, October.
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    Cited by:

    1. Dominykas Poderys, 2015. "Does Access to External Finance Affect Development of Small and Medium Enterprises and Economic Growth?," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 1(1), pages 43-53, November.
    2. Durairaj Kumarasamy & Prakash Singh, 2018. "Access to Finance, Financial Development and Firm Ability to Export: Experience from Asia–Pacific Countries," Asian Economic Journal, East Asian Economic Association, vol. 32(1), pages 15-38, March.
    3. Gnangnon, Sèna Kimm, 2019. "Financial Development and Tax Revenue in Developing Countries: Investigating the International Trade and Economic Growth Channels," EconStor Preprints 206628, ZBW - Leibniz Information Centre for Economics.

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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