IDEAS home Printed from https://ideas.repec.org/p/cdi/wpaper/1366.html
   My bibliography  Save this paper

Financial Factors and Manufacturing Exports:Theory and Firm-level Evidence From Egypt

Author

Listed:
  • Alexandru MINEA

    (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

  • Youssouf KIENDREBEOGO

Abstract

This paper focuses on the effects of financial factors on manufacturing firms' export participation. Using a simple dynamic discrete choice model, we first present the intuition according to which financial constraints reduce the probability of exporting. Then, based on a panel of Egyptian manufacturing firms over the 2003-2008 period, we estimate the impact of financial constraints on export market participation. Our main results show that, unlike financial liquidity, financial constraints reduce the export participation of Egyptian firms. In addition, financial constraints equally have a negative impact on alternative measures of the export activity, namely the export intensity and the time firm take before starting to export

Suggested Citation

  • Alexandru MINEA & Youssouf KIENDREBEOGO, 2012. "Financial Factors and Manufacturing Exports:Theory and Firm-level Evidence From Egypt," Working Papers 201221, CERDI.
    • Handle: RePEc:cdi:wpaper:1366
    as

    Download full text from publisher

    File URL: http://publi.cerdi.org/ed/2012/2012.21.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Flora Bellone & Patrick Musso & Lionel Nesta & Stefano Schiavo, 2010. "Financial Constraints and Firm Export Behaviour," The World Economy, Wiley Blackwell, vol. 33(3), pages 347-373, March.
    2. Patrick Musso & Stefano Schiavo, 2008. "The impact of financial constraints on firm survival and growth," Journal of Evolutionary Economics, Springer, vol. 18(2), pages 135-149, April.
    3. Thorsten Beck & Asli Demirguc‐Kunt & Luc Laeven & Ross Levine, 2008. "Finance, Firm Size, and Growth," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(7), pages 1379-1405, October.
    4. Joel Stiebale, 2011. "Do Financial Constraints Matter for Foreign Market Entry? A Firm‐level Examination," The World Economy, Wiley Blackwell, vol. 34(1), pages 123-153, January.
    5. Bee Yan Aw & Mark J. Roberts & Tor Winston, 2007. "Export Market Participation, Investments in R&D and Worker Training, and the Evolution of Firm Productivity," The World Economy, Wiley Blackwell, vol. 30(1), pages 83-104, January.
    6. Hudson, John & Minea, Alexandru, 2013. "Innovation, Intellectual Property Rights, and Economic Development: A Unified Empirical Investigation," World Development, Elsevier, vol. 46(C), pages 66-78.
    7. Greenaway, David & Guariglia, Alessandra & Kneller, Richard, 2007. "Financial factors and exporting decisions," Journal of International Economics, Elsevier, vol. 73(2), pages 377-395, November.
    8. Sean Cleary, 1999. "The Relationship between Firm Investment and Financial Status," Journal of Finance, American Finance Association, vol. 54(2), pages 673-692, April.
    9. Arne Bigsten & Paul Collier & Stefan Dercon & Marcel Fafchamps & Bernard Gauthier & Jan Willem Gunning & Abena Oduro & Remco Oostendorp & Catherine Pattillo & Måns Soderbom & Francis Teal & Albert Zeu, 2004. "Do African Manufacturing Firms Learn from Exporting?," Journal of Development Studies, Taylor & Francis Journals, vol. 40(3), pages 115-141.
    10. Delgado, Miguel A. & Farinas, Jose C. & Ruano, Sonia, 2002. "Firm productivity and export markets: a non-parametric approach," Journal of International Economics, Elsevier, vol. 57(2), pages 397-422, August.
    11. 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.
    12. Sarah Bridges & Alessandra Guariglia, 2008. "Financial Constraints, Global Engagement, And Firm Survival In The United Kingdom: Evidence From Micro Data," Scottish Journal of Political Economy, Scottish Economic Society, vol. 55(4), pages 444-464, September.
    13. John Baldwin & Wulong Gu, 2003. "Export-market participation and productivity performance in Canadian manufacturing," Canadian Journal of Economics, Canadian Economics Association, vol. 36(3), pages 634-657, August.
    14. Steven M. Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1988. "Financing Constraints and Corporate Investment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1), pages 141-206.
    15. Becchetti, Leonardo & Trovato, Giovanni, 2002. "The Determinants of Growth for Small and Medium Sized Firms: The Role of the Availability of External Finance," Small Business Economics, Springer, vol. 19(4), pages 291-306, December.
    16. Cleary, Sean, 2006. "International corporate investment and the relationships between financial constraint measures," Journal of Banking & Finance, Elsevier, vol. 30(5), pages 1559-1580, May.
    17. Beck, Thorsten, 2002. "Financial development and international trade: Is there a link?," Journal of International Economics, Elsevier, vol. 57(1), pages 107-131, June.
    18. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    19. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    20. Beck, Thorsten & Demirguc-Kunt, Asli, 2006. "Small and medium-size enterprises: Access to finance as a growth constraint," Journal of Banking & Finance, Elsevier, vol. 30(11), pages 2931-2943, November.
    21. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    22. Chirinko, Robert S & Schaller, Huntley, 1995. "Why Does Liquidity Matter in Investment Equations?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(2), pages 527-548, May.
    23. David Greenaway & Richard Kneller, 2007. "Firm heterogeneity, exporting and foreign direct investment," Economic Journal, Royal Economic Society, vol. 117(517), pages 134-161, February.
    24. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    25. Dani Rodrik, 2009. "Growth after the Crisis," World Bank Publications - Books, The World Bank Group, number 27937, December.
    26. Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, vol. 87(4), pages 545-564, September.
    27. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 317-341.
    28. Andrew Bernard & Joachim Wagner, 2001. "Export entry and exit by German firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 137(1), pages 105-123, March.
    29. Blalock, Garrick & Gertler, Paul J., 2004. "Learning from exporting revisited in a less developed setting," Journal of Development Economics, Elsevier, vol. 75(2), pages 397-416, December.
    30. Svaleryd, Helena & Vlachos, Jonas, 2005. "Financial markets, the pattern of industrial specialization and comparative advantage: Evidence from OECD countries," European Economic Review, Elsevier, vol. 49(1), pages 113-144, January.
    31. Steven N. Kaplan & Luigi Zingales, 1997. "Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(1), pages 169-215.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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. Deniz Baglan & Hakan Yilmazkuday, 2018. "Financial Health and the Intensive Margin of Trade," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(6), pages 1304-1319, May.
    3. Norashida Othman & Zulkornain Yusop & Mohd Mansor Ismail & Syamsul Herman Mohammad Afandi, 2021. "Energy Tax and the Downstream Palm Oil Trade Competitiveness Nexus in Malaysia: An Application of GMM Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 11(5), pages 593-599.
    4. Natalia Nehrebecka, 2018. "Sectoral risk assessment with particular emphasis on export enterprises in Poland," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 36(2), pages 677-700.
    5. Almila Burgac Cil & Fikret Dulger, 2018. "Financial Constraints, Firm Characteristics and Exports: Evidence from Turkish Manufacturing Firms," International Journal of Economics and Financial Issues, Econjournals, vol. 8(1), pages 168-174.
    6. Joachim Wagner, 2016. "Credit Constraints and Exports: A Survey of Empirical Studies Using Firm Level Data," World Scientific Book Chapters, in: Microeconometrics of International Trade, chapter 12, pages 401-421, World Scientific Publishing Co. Pte. Ltd..
    7. Nora Aboushady & Chahir Zaki, 2019. "Investment climate and Trade Margins in Egypt: Which Factors Do Matter?," Economics Bulletin, AccessEcon, vol. 39(4), pages 2275-2301.
    8. Natalia Nehrebecka, 2018. "Sectoral risk assessment: evidence from Poland," IFC Bulletins chapters, in: Bank for International Settlements (ed.), External sector statistics: current issues and new challenges, volume 48, Bank for International Settlements.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Flora Bellone & Patrick Musso & Lionel Nesta & Stefano Schiavo, 2010. "Financial Constraints and Firm Export Behaviour," The World Economy, Wiley Blackwell, vol. 33(3), pages 347-373, March.
    2. repec:hal:spmain:info:hdl:2441/9948 is not listed on IDEAS
    3. repec:spo:wpecon:info:hdl:2441/9948 is not listed on IDEAS
    4. repec:hal:wpspec:info:hdl:2441/9948 is not listed on IDEAS
    5. Flora Bellone & Patrick Musso & Lionel Nesta & Stefano Schiavo, 2008. "Financial Constraints as a Barrier to Export Participation," SciencePo Working papers Main hal-01074250, HAL.
    6. repec:hal:wpspec:info:hdl:2441/6866 is not listed on IDEAS
    7. Filomena Pietrovito & Alberto Franco Pozzolo, 2021. "Credit constraints and exports of SMEs in emerging and developing countries," Small Business Economics, Springer, vol. 56(1), pages 311-332, January.
    8. repec:hal:spmain:info:hdl:2441/9797 is not listed on IDEAS
    9. repec:hal:spmain:info:hdl:2441/6866 is not listed on IDEAS
    10. repec:spo:wpecon:info:hdl:2441/6866 is not listed on IDEAS
    11. Peter H. Egger & Michaela Kesina, 2014. "Financial Constraints and the Extensive and Intensive Margin of Firm Exports: Panel Data Evidence from China," Review of Development Economics, Wiley Blackwell, vol. 18(4), pages 625-639, November.
    12. Almila Burgac Cil & Fikret Dulger, 2018. "Financial Constraints, Firm Characteristics and Exports: Evidence from Turkish Manufacturing Firms," International Journal of Economics and Financial Issues, Econjournals, vol. 8(1), pages 168-174.
    13. Tarlok Singh, 2010. "Does International Trade Cause Economic Growth? A Survey," The World Economy, Wiley Blackwell, vol. 33(11), pages 1517-1564, November.
    14. Matthew A. Cole & Robert J. R. Elliott & Supreeya Virakul, 2010. "Firm Heterogeneity, Origin of Ownership and Export Participation," The World Economy, Wiley Blackwell, vol. 33(2), pages 264-291, February.
    15. Yan, Bing & Zhang, Yu & Shen, Yanzhi & Han, Jian, 2018. "Productivity, financial constraints and outward foreign direct investment: Firm-level evidence," China Economic Review, Elsevier, vol. 47(C), pages 47-64.
    16. Juan A. Máñez Castillejo & Oscar Vicente-Chirivella, 2019. "Exports of Spanish manufacturing firms and financial constraints," Working Papers 1921, Department of Applied Economics II, Universidad de Valencia.
    17. 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.
    18. Saira Qasim & Marian Rizov & Xufei Zhang, 2021. "Financial constraints and the export decision of Pakistani firms," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 4557-4573, July.
    19. M. Padmaja & Subash Sasidharan, 2021. "Financing constraints and exports: evidence from India," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 45(1), pages 118-145, January.
    20. Angelo Secchi & Federico Tamagni & Chiara Tomasi, 2016. "Financial constraints and firm exports: accounting for heterogeneity, self-selection, and endogeneity," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 25(5), pages 813-827.
    21. Chen, Minjia & Guariglia, Alessandra, 2013. "Internal financial constraints and firm productivity in China: Do liquidity and export behavior make a difference?," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 1123-1140.
    22. Prakash Singh & Dibyendu Maiti, 2019. "Sources of Finance, Innovation and Exportability in Asia: Cross-country Evidences," Journal of Asian Economic Integration, , vol. 1(1), pages 73-96, April.
    23. José Manuel Mansilla-Fernández & Juliette Milgram-Baleix, 2023. "Working capital management, financial constraints and exports: evidence from European and US manufacturers," Empirical Economics, Springer, vol. 64(4), pages 1769-1810, April.
    24. Youssouf KIENDREBEOGO, 2012. "Export Activity and Productivity: New Evidence from the Egyptian Manufacturing Industry," Working Papers 201220, CERDI.
    25. Patrick Musso & Stefano Schiavo, 2008. "The impact of financial constraints on firm survival and growth," Journal of Evolutionary Economics, Springer, vol. 18(2), pages 135-149, April.
    26. Youssouf Kiendrebeogo, 2020. "How do banking crises affect bilateral exports?," Empirical Economics, Springer, vol. 58(3), pages 1431-1459, March.
    27. Nakhoda, Aadil, 2012. "The influence of financial leverage of firms on their international trading activities," MPRA Paper 35765, University Library of Munich, Germany.

    More about this item

    Keywords

    Financial Constraints; Exports; Firm-Level Evidence; Sunk Costs;
    All these keywords.

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • F10 - International Economics - - Trade - - - General
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cdi:wpaper:1366. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Vincent Mazenod (email available below). General contact details of provider: https://edirc.repec.org/data/ceauvfr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.