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The role of credit constraints on firms’ exporting and importing activities

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  • David Aristei
  • Chiara Franco

Abstract

This article investigates the role of credit constraints on export, import, and two-way trade activities of European manufacturing firms. Using direct financial constraints indicators and accounting for endogeneity issues, we find that credit rationing significantly reduces both the probability of entering foreign markets and the intensive margins of trade. Empirical results also point out that the role of extra entry costs differs according to the location of foreign markets and to the type of imported goods and services. Conditional on trading in the European Union, rationing is not an obstacle to entering additional exporting and importing markets, even though two-way traders behave differently and are negatively affected by financial constraints when they enter non-EU markets.

Suggested Citation

  • David Aristei & Chiara Franco, 2014. "The role of credit constraints on firms’ exporting and importing activities," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 23(6), pages 1493-1522.
    • Handle: RePEc:oup:indcch:v:23:y:2014:i:6:p:1493-1522.
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    File URL: http://hdl.handle.net/10.1093/icc/dtu032
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    Citations

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    Cited by:

    1. Banerjee, Soumendra Nath & Roy, Jayjit & Yasar, Mahmut, 2021. "Exporting and pollution abatement expenditure: Evidence from firm-level data," Journal of Environmental Economics and Management, Elsevier, vol. 105(C).
    2. Joachim Wagner, 2019. "Access to Finance and Exports – Comparable Evidence for Small and Medium Enterprises from Industry and Services in 25 European Countries," Open Economies Review, Springer, vol. 30(4), pages 739-757, September.
    3. Valeria Gattai, 2015. "Internationalisation and performance at the firm-level: what we learn from Italy," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(4), pages 475-509, December.
    4. Francesco Nucci & Filomena Pietrovito & Alberto Franco Pozzolo, 2021. "Imports and credit rationing: A firm‐level investigation," The World Economy, Wiley Blackwell, vol. 44(11), pages 3141-3167, November.
    5. 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.
    6. Oliviero A. Carboni & Giuseppe Medda, 2018. "R&D, export and investment decision: evidence from European firms," Applied Economics, Taylor & Francis Journals, vol. 50(2), pages 187-201, January.
    7. Valeria Gattai, 2015. "Foreign exposure and heterogeneous performance of Italian firms: A survey of the empirical literature (1992-2014)," Working Papers 300, University of Milano-Bicocca, Department of Economics, revised Apr 2015.
    8. Oliviero A. Carboni & Giuseppe Medda, 2021. "Innovative activities and investment decision: evidence from European firms," The Journal of Technology Transfer, Springer, vol. 46(1), pages 172-196, February.
    9. OA Carboni & G Medda, 2017. "Do Investment and Innovation Boost Export? An Analysis on European Firms," Working Paper CRENoS 201708, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.

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