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Cash-in-advance, export decision and financial constraints: Evidence from cross-country firm-level data

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  • Doan, Ngoc Thang
  • Vu, Thi Kim Chi
  • Nguyen, Thi Cam Thuy
  • Nguyen, Thi Hong Hai
  • Nguyen, Kieu Trang

Abstract

This paper investigates the relationship between Cash In Advance (CIA) and firms’ export participation, particularly in the presence of financial constraints. Using the firm-level data covering 56 countries for the period from 2006 to 2010, we detect the positive correlation of the employment of CIA and the export participation of small and medium-sized firms only. This correlation becomes more prominent for severely credit-constrained firms. One possible explanation is that CIA raises the export possibility of small and medium-sized firms by ameliorating credit constraints while it plays no role in large-sized ones.

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  • Doan, Ngoc Thang & Vu, Thi Kim Chi & Nguyen, Thi Cam Thuy & Nguyen, Thi Hong Hai & Nguyen, Kieu Trang, 2020. "Cash-in-advance, export decision and financial constraints: Evidence from cross-country firm-level data," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 75-92.
    • Handle: RePEc:eee:reveco:v:69:y:2020:i:c:p:75-92
    DOI: 10.1016/j.iref.2020.04.013
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    Cited by:

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    2. Ha, Le Thanh & Thanh, To Trung & Thang, Doan Ngoc & Anh, Pham Thi Hoang, 2021. "Bribery, export decisions, and institutional constraints: Evidence from cross-country firm-level data," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 585-612.
    3. Das, Khanindra Ch. & Mahalik, Mantu Kumar, 2023. "Renewable energy use and export performance of manufacturing firms: Panel evidence from six industries in India," Energy Economics, Elsevier, vol. 125(C).
    4. 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.
    5. Ha, Le Thanh & Dung, Hoang Phuong & Thanh, To Trung, 2023. "Bribery, global value chain decisions, and institutional constraints: Evidence from a cross-country firm-level data," International Economics, Elsevier, vol. 173(C), pages 119-142.
    6. Zhang, Dongyang & Wang, Cao & Wang, Yizhi, 2024. "Unveiling the critical nexus: Volatility of crude oil future prices and trade partner’s cash holding behavior in the face of the Russia–Ukraine conflict," Energy Economics, Elsevier, vol. 132(C).
    7. 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.

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    More about this item

    Keywords

    Cash in advance; Export decision; Financial constraint; Trade credit; SMEs;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • F10 - International Economics - - Trade - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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