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Financial constraints as a barrier to export participation

  • Flora Bellone

    (University of Nice)

  • Patrick Musso


  • Lionel Nesta

    (Observatoire Français des Conjonctures Économiques)

  • Stefano Schiavo

    (University of Trento)

The paper analyzes the link between financial constraints and firms' export decisions, using a large micro-level data set on French manufacturing firms over the 1996-2004 period. Our main finding is that firms enjoying better ex-ante financial heath are more likely to start exporting. This results contrasts with the previous empirical literature which found evidence that participation to exports market improves a firm financial health but not that export starters display specific ex-ante financial advantages. By contrast, our result supports the view that financial constraints act as a barrier to export participation. This finding has important policy implications as it suggests that, in presence of financial markets imperfections, public intervention can be called for to help efficient but financially constrained firms to overcome the sunk entry costs into export markets and expand their activities abroad.

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Paper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number 2008-29.

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Date of creation: 2008
Date of revision:
Handle: RePEc:fce:doctra:0829
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