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Effects of financial constraints on export performance of firms during the global financial crisis: microeconomic evidence from Korea

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  • Minjung Kim

Abstract

This study uses a manufacturing firm-level panel data set of South Korea for 2006–2013 to investigate the effect of financial constraints on the export performance of firms, with particular emphasis on the corporate ownership structure. The empirical results show that foreign multinational corporation (MNC) subsidiaries are not affected by financial constraint during both crisis and noncrisis periods, implying advantages of foreign ownership. However, domestic firms suffer more from financial constraints on exports during crisis years. In particular, domestic firms without parent firms are financially constrained during both crisis and noncrisis periods. However, those with parent firms do not experience financial constraints during noncrisis periods, although they too suffer from them during crisis periods. Thus, parent–subsidiary linkage among domestic firms plays an important role in alleviating financial constraints on export activity in noncrisis years but not as much during crisis years. Therefore, domestic parent firms exhibit less resilience to the global financial crisis, in comparison to foreign MNC parent firms.

Suggested Citation

  • Minjung Kim, 2019. "Effects of financial constraints on export performance of firms during the global financial crisis: microeconomic evidence from Korea," Applied Economics Letters, Taylor & Francis Journals, vol. 26(1), pages 10-15, January.
    • Handle: RePEc:taf:apeclt:v:26:y:2019:i:1:p:10-15
    DOI: 10.1080/13504851.2018.1430346
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    Cited by:

    1. Sam Z. Njinyah & Sally Jones & Simplice A. Asongu, 2022. "Revisiting the moderation effect of network on the export barrier –export performance in the Cameroon context," Working Papers of the African Governance and Development Institute. 22/073, African Governance and Development Institute..
    2. Nguyen, Quyen T.K. & Almodóvar, Paloma & Wei, Ziyi, 2022. "Intra-firm and arm’s length export propensity and intensity of MNE foreign subsidiaries," Journal of Business Research, Elsevier, vol. 145(C), pages 288-308.

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