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Exporting, Capital Investment and Financial Constraints


  • Vlad Manole
  • Mariana Spatareanu


Many firms cite financial constraints as some of the most important impediments to their investment and growth. Using a unique data set from the Czech Republic this paper investigates the importance of financing constraints in the context of exporters. It finds that exporters are less financially constrained than non-exporters. However, after carefully correcting for possible endogeneity and selection issues, the evidence points to less constrained firms self-selecting into exporting rather than exporting alleviating firms' financial constraints. The analysis suggests that easing firms' credit constraints may play an important role in facilitating exporting and that welldeveloped financial markets that would decrease firms' cost of external finance may be needed in order to benefit from selling in foreign markets.

Suggested Citation

  • Vlad Manole & Mariana Spatareanu, 2009. "Exporting, Capital Investment and Financial Constraints," LICOS Discussion Papers 25209, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  • Handle: RePEc:lic:licosd:25209

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    References listed on IDEAS

    1. Bernard, Andrew B. & Bradford Jensen, J., 1999. "Exceptional exporter performance: cause, effect, or both?," Journal of International Economics, Elsevier, vol. 47(1), pages 1-25, February.
    2. Guariglia, Alessandra & Mateut, Simona, 2010. "Inventory investment, global engagement, and financial constraints in the UK: Evidence from micro data," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 239-250, March.
    3. Thorsten Beck, 2003. "Financial Dependence and International Trade," Review of International Economics, Wiley Blackwell, vol. 11(2), pages 296-316, May.
    4. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    5. Steven M. Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1996. "Financing Constraints and Corporate Investment: Response to Kaplan and Zingales," NBER Working Papers 5462, National Bureau of Economic Research, Inc.
    6. Gelos, R. Gaston & Werner, Alejandro M., 2002. "Financial liberalization, credit constraints, and collateral: investment in the Mexican manufacturing sector," Journal of Development Economics, Elsevier, vol. 67(1), pages 1-27, February.
    7. Konings, Jozef & Rizov, Marian & Vandenbussche, Hylke, 2003. "Investment and financial constraints in transition economies: micro evidence from Poland, the Czech Republic, Bulgaria and Romania," Economics Letters, Elsevier, vol. 78(2), pages 253-258, February.
    8. Lubomír Lízal & Jan Svejnar, 2002. "Investment, Credit Rationing, And The Soft Budget Constraint: Evidence From Czech Panel Data," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 353-370, May.
    9. Beck, Thorsten & Levine, Ross, 2002. "Industry growth and capital allocation:*1: does having a market- or bank-based system matter?," Journal of Financial Economics, Elsevier, vol. 64(2), pages 147-180, May.
    10. Campa, Jose M. & Shaver, J. Myles, 2002. "Exporting and capital investment: On the strategic behavior of exporters," IESE Research Papers D/469, IESE Business School.
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    Cited by:

    1. Abubakr Saeed & Olusegun Vincent, 2012. "Bank Concentration and Firm Investment: Empirical Evidence from India," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(3), pages 85-105, May.
    2. Abubakr Saeed & Olusegun Vincent, 2012. "Bank Concentration and Firm Investment: Empirical Evidence from India," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(3), pages 85-105, May.
    3. Joachim Wagner, 2014. "Credit constraints and exports: evidence for German manufacturing enterprises," Applied Economics, Taylor & Francis Journals, vol. 46(3), pages 294-302, January.
    4. Deniz Baglan & Hakan Yilmazkuday, 2016. "Financial Health and the Intensive Margin of Trade," Working Papers 1607, Florida International University, Department of Economics.
    5. Pauline Bourgeon & Jean-Charles Bricongne & Guillaume Gaulier, 2012. "Financing Time to Trade: Evidence from French firms," Documents de travail du Centre d'Economie de la Sorbonne 12016, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    6. Saeed Abubakr & Franco Esposito, 2012. "Bank concentration and financial constraints on firm investment in UK," Studies in Economics and Finance, Emerald Group Publishing, vol. 29(1), pages 11-25, March.
    7. Varela, Liliana, 2017. "Sector heterogeneity and credit market imperfections in emerging markets," Journal of International Money and Finance, Elsevier, vol. 70(C), pages 433-451.
    8. Philippe Askenazy & Aida Caldera & Guillaume Gaulier & Delphine Irac, 2015. "Financial constraints and foreign market entries or exits: firm-level evidence from France," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(2), pages 231-253, May.
    9. Filipe Silva & Carlos Carreira, 2011. "Financial Constraints and Exports: An Analysis of Portuguese Firms During the European Monetary Integration," Notas Económicas, Faculty of Economics, University of Coimbra, issue 34, pages 35-56, December.
    10. Raffaello Bronzini & Alessio D'Ignazio, 2016. "Bank internationalization and firm exports: evidence from matched firm-bank data," Temi di discussione (Economic working papers) 1055, Bank of Italy, Economic Research and International Relations Area.
    11. Armando Silva, 2011. "Financial Constraints and Exports: Evidence from Portuguese Manufacturing Firms," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Eastern Macedonia and Thrace Institute of Technology (EMATTECH), Kavala, Greece, vol. 4(3), pages 7-19, December.
    12. Juan A. Máñez & María E. Rochina-Barrachina & Juan A. Sanchis-Llopis & Oscar Vicente, 2013. "Financial constraints and Spanish manufacturing firms’ R&D and exporting," Working Papers 1324, Department of Applied Economics II, Universidad de Valencia.
    13. Joachim Wagner, 2014. "Credit constraints and exports: a survey of empirical studies using firm-level data," Industrial and Corporate Change, Oxford University Press, vol. 23(6), pages 1477-1492.
    14. repec:hal:journl:halshs-00677343 is not listed on IDEAS
    15. Emanuele Forlani, 2014. "Financial Reliability and Firms' Export Activity," DEM Working Papers Series 093, University of Pavia, Department of Economics and Management.
    16. Emanuele Forlani, 2010. "Liquidity Constraints and Firm’s Export Activity," Development Working Papers 291, Centro Studi Luca d'Agliano, University of Milano, revised 30 Apr 2010.

    More about this item


    exporting; cash flow; financial constraints;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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