Financial Constraints and Foreign Market Entries or Exits : Firm-Level Evidence from France ∗

Content Provider	Semantic Scholar
Author	Askenazy, Philippe Caldera, Aida Gaulier, Guillaume Irac, Delphine
Copyright Year	2011
Abstract	This paper studies the e¤ect of credit constraints on the expansion and survival of rms in foreign markets. It develops a model of the multi-country rm, in which, lower access to external nance, or reduced internal liquidity, hampers the rm ability to nance the recurrent costs to serve foreign markets and decreases rm survival in foreign markets. Additionally, nancial constraints act as a barrier to rm export expansion by decreasing the rm ability to nance the entry costs into new export markets; thus, they push rm to avoid losing destinations and by the same token may increase rm survival in a given foreign market We use a unique longitudinal dataset on French rms that contains information on export destinations of individual rms and allows us to construct various rm-level measures of nancial constraints to test these predictions. We obtain two main results. First, credit constraints have a negative e¤ect on the number of newly served destinations. Second, higher probability of exit from the export market is also associated with credit constraints. This seems to suggest that, no less than an issue of nancing entry costs, credit constraints bear upon the recurrent costs of survival in an existing destination and strongly a¤ect the rms’portfolio of destinations by this token. Keywords: Firm heterogeneity, nancial constraints, trade JEL classi cation: D24, F14, D92
File Format	PDF HTM / HTML
Alternate Webpage(s)	https://publications.banque-france.fr/sites/default/files/medias/documents/working-paper_328_2011.pdf
Alternate Webpage(s)	http://www.cepremap.fr/depot/docweb/docweb1112.pdf
Language	English
Access Restriction	Open
Content Type	Text
Resource Type	Article