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Access to finance, exporting and a non-monotonic firm expansion

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  • Jože Damijan
  • Črt Kostevc
  • Sašo Polanec

Abstract

In this paper we analyse the role financial constraints play in firm expansion in both domestic and export markets. We use data on Slovenian manufacturing firms that were active between 2001 and 2012. In contrast to existing studies, we use generalized propensity score and continuous matching techniques to estimate the effects of differences in access to bank financing. We show that the response of sales to measure of access to external funds differs considerably between firms of different size. The largest effect of additional external funds is observed for small firms. Moreover, the relationship between debt and domestic/foreign sales is non-monotonic, displaying a pronounced inverse U-shape. Thus, an increase in debt financing may cause a decrease in exporting and domestic sales for some levels of indebtedness, while stimulating it for other levels. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Jože Damijan & Črt Kostevc & Sašo Polanec, 2015. "Access to finance, exporting and a non-monotonic firm expansion," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 42(1), pages 131-155, February.
    • Handle: RePEc:kap:empiri:v:42:y:2015:i:1:p:131-155
    DOI: 10.1007/s10663-014-9251-5
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    More about this item

    Keywords

    Exports; Financial constraints; Continuous matching; Intensive margin; D24; F12; F14;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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