Exporting, Capital Investment and Financial Constraints

LICOS Discussion Paper 252/2009

27 Pages Posted: 16 Jan 2010

See all articles by Vlad Manole

Vlad Manole

Rutgers University, Department of Economics

Mariana Spatareanu

Rutgers University Department of Economics and Division of Global Affairs

Date Written: 2009

Abstract

Many firms cite financial constraints as some of the most important impediments to their investment and growth. Using a unique data set from the Czech Republic this paper investigates the importance of financing constraints in the context of exporters. It finds that exporters are less financially constrained than non-exporters. However, after carefully correcting for possible endogeneity and selection issues, the evidence points to less constrained firms self-selecting into exporting rather than exporting alleviating firms’ financial constraints. The analysis suggests that easing firms’ credit constraints may play an important role in facilitating exporting and that well developed financial markets that would decrease firms’ cost of external finance may be needed in order to benefit from selling in foreign markets.

Keywords: exporting, cash flow, financial constraints

JEL Classification: F21, F23, F36

Suggested Citation

Manole, Vlad and Spatareanu, Mariana, Exporting, Capital Investment and Financial Constraints (2009). LICOS Discussion Paper 252/2009, Available at SSRN: https://ssrn.com/abstract=1536493 or http://dx.doi.org/10.2139/ssrn.1536493

Vlad Manole

Rutgers University, Department of Economics ( email )

360 Martin Luther King Jr.
Newark, NJ 07102
United States

Mariana Spatareanu (Contact Author)

Rutgers University Department of Economics and Division of Global Affairs ( email )

360 ML King Jr. Blvd.
Newark, NJ 07102
United States
973 353 5249 (Phone)
973 353 5819 (Fax)

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