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Credit constraints and firm imports of capital goods: Evidence from middle- and low-income countries

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  • Dario Fauceglia

Abstract

Using firm-level data across developing countries, this paper estimates the effect of credit constraints on machinery and equipment imports (i.e. capital imports). We infer credit constraints from survey questions on the availability and cost of finance instead of relying on firms’ financial situation. After accounting for the potential endogeneity of self-reported credit constraints, the analysis suggests that the probability to import capital goods reduces to almost zero for credit constrained firms. This finding holds after controlling for other relevant firm characteristics and across various specifications and models.

Suggested Citation

  • Dario Fauceglia, 2014. "Credit constraints and firm imports of capital goods: Evidence from middle- and low-income countries," International Economics, CEPII research center, issue 140, pages 1-18.
    • Handle: RePEc:cii:cepiie:2014-q4-140-1
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    File URL: http://www.sciencedirect.com/science/article/pii/S2110701714000365
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    Cited by:

    1. Sandra M. Leitner & Robert Stehrer, 2016. "The Role of Financial Constraints for Different Innovation Strategies: Evidence for CESEE and FSU Countries," wiiw Working Papers 125, The Vienna Institute for International Economic Studies, wiiw.
    2. Fidrmuc, Jan & Gaibulloev, Khusrav & Mirzaei, Ali & Moore, Tomoe, 2024. "The effect of capital inflows on the imports of capital goods in developing countries," Journal of Corporate Finance, Elsevier, vol. 84(C).

    More about this item

    Keywords

    International trade; Capital imports; Machinery and equipment; Financial development; Credit constraints;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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