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Financial Constraints, Firms' Supply Chains and Internationalization

Author

Listed:
  • Raoul Minetti

    (Michigan State University)

  • Pierluigi Murro

    (LUMSA University)

  • Zeno Rotondi

    (UniCredit Bank)

  • Susan Chun Zhu

    (Michigan State University)

Abstract

Using a unique sample of small and medium-sized Italian firms, we investigate the effect of financial constraints on firms' participation in domestic and international supply chains. We find that firms more exposed to credit rationing and with weaker relationships with banks are more likely to participate in supply chains to overcome liquidity shortages. This benefit of supply chains is especially strong when firms forge ties with international trading partners and when they establish long-term relationships with large suppliers. To control for possible endogeneity of firms' access to credit, we construct instruments capturing exogenous shocks to the structure of the Italian local banking markets.

Suggested Citation

  • Raoul Minetti & Pierluigi Murro & Zeno Rotondi & Susan Chun Zhu, 2016. "Financial Constraints, Firms' Supply Chains and Internationalization," CERBE Working Papers wpC06, CERBE Center for Relationship Banking and Economics.
    • Handle: RePEc:lsa:wpaper:wpc06
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    File URL: https://repec.lumsa.it/wp/wpC06.pdf
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    Cited by:

    1. MATSUURA Toshiyuki, 2023. "Servicification of Japanese Manufacturing Firms and Its Impact on Corporate Performance in the Export Market," Discussion papers 23043, Research Institute of Economy, Trade and Industry (RIETI).
    2. Giovanni Ferri & Pierluigi Murro, 2016. "A Credit Crunch Behind the Great Trade Collapse? Micro Evidence From Europe," CERBE Working Papers wpC10, CERBE Center for Relationship Banking and Economics.
    3. Ferri, Giovanni & Murro, Pierluigi & Peruzzi, Valentina & Rotondi, Zeno, 2019. "Bank lending technologies and credit availability in Europe: What can we learn from the crisis?," Journal of International Money and Finance, Elsevier, vol. 95(C), pages 128-148.
    4. Ferri, Giovanni & Minetti, Raoul & Murro, Pierluigi, 2019. "Credit Relationships in the great trade collapse. Micro evidence from Europe," Journal of Financial Intermediation, Elsevier, vol. 40(C).
    5. Zhou, Xiaoxiao & Lin, Junjie & Wang, Lu & Huang, Hongyun & Zhao, Xin, 2022. "Wind power resources and China's sustainable development roadmap: Evidence from China," Resources Policy, Elsevier, vol. 79(C).
    6. Bertrand, Jérémie & Murro, Pierluigi, 2022. "Firm–bank “odd couples” and trade credit: Evidence from Italian small- and medium-sized enterprises," Economic Modelling, Elsevier, vol. 111(C).
    7. Ketan Reddy & Subash Sasidharan, 2022. "Servicification and global value chain survival: Firm‐level evidence from India," Australian Economic Papers, Wiley Blackwell, vol. 61(3), pages 455-473, September.
    8. Thang, Doan Ngoc & Ha, Le Thanh, 2022. "Trade credit and global value chain: Evidence from cross-country firm-level data," International Economics, Elsevier, vol. 171(C), pages 110-129.

    More about this item

    Keywords

    Credit; Global Value Chains; Internationalization;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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