2011/24 LEM Working Paper Series

Exporting under financial constraints: margins, switching dynamcs and prices

Angelo Secchi, Federico Tamagni, Chiara Tomasi
Financial constraints, margins of export, export prices

  JEL Classifications
F10, F14, F30, G20

Using data on cross border transactions together with an informative measure of financing constraints this paper provides new evidence that limited access to external capital narrows the scale of foreign sales, the exporters? product scope and the number of trade partners. It shows that constrained firms have a reduced probability of adding and a higher probability of dropping products and destinations. Further it documents that constrained firms sell their products at higher prices as compared to unconstrained firms. All the results are robust to specific control for unobserved heterogeneity, self-selection into export and potential endogeneity of the financial constraints proxy.

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