Credit constraints, currency depreciation and international trade

Li, Jie; Lan, Liping; Ouyang, Zhigang

doi:10.1016/j.jimonfin.2020.102175

Cited by 15 publications

(7 citation statements)

References 45 publications

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“…(2015), Chaney (2016), Villar et al . (2019), Rana et al (2020), and Li et al . (2020), among others.…”

Section: Notesmentioning

confidence: 95%

“…There is a growing literature documenting that a firm's credit constraint severely impedes its participation in the export market [1]. The existence of significant fixed cost allows firms with higher productivity (Melitz, 2003) or laxer credit constraint (Chaney, 2016; Li et al ., 2020) to enter the export market. On the other hand, different types of exporters face different export costs: new entrants face entry cost, whereas incumbent exporters face maintenance cost.…”

Section: Introductionmentioning

confidence: 99%

“…Greenaway et al (2007) document a great influence of external financing constraint on firm export behavior. Li et al (2020) argue that credit-constrained exporters respond to currency depreciation by increasing production first in sectors with less external financing dependence. Based on country-level data, other studies also find that financing constraints affect export, with greater influence on trading countries with higher funding demand (Kletzer and Bardhan, 1987; Beck, 2002; Matsuyama, 2005).…”

Section: Introductionmentioning

confidence: 99%

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The differentiated impacts of external and internal financing on export: the firm-level evidence

Meng

Xue

Xiao³

et al. 2021

IJOEM

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PurposeThe authors provide firm-level evidence that external financing affects international trade in a way different from internal financing.Design/methodology/approachThe authors separate new entrants from incumbent exporters and investigate the roles of external and internal financing in export market participation and export quantity.FindingsThe authors find that external financing is of particular importance, as well as internal financing, in helping a firm become a new exporter. By contrast, external financing, unlike internal financing, is not significantly important for an incumbent exporter to stay in the international market. Regarding export quantity, a firm's internal financing is positively associated with more export quantity, whereas external financing is not.Originality/valueThe authors’ findings are consistent with the existence of significant fixed cost for entering the export market and external financing is particularly needed to cover such cost. Meanwhile, the financial need for maintaining the export status is much less and can be satisfied via internal financing.

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“…(2015), Chaney (2016), Villar et al . (2019), Rana et al (2020), and Li et al . (2020), among others.…”

Section: Notesmentioning

confidence: 95%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

The differentiated impacts of external and internal financing on export: the firm-level evidence

Meng

Xue

Xiao³

et al. 2021

IJOEM

View full text Add to dashboard Cite

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“…The international economics literature shows that the access to financial capital can affect international trade flows, such as entry into exporting and exporters' trade performance (Leibovici, 2021;Demir and Javorcik, 2020; for a review, see Foley and Manova, 2015;Vaubourg, 2016). The impacts of credit constraints on trade activity can vary differently across sectors, depending on their financial vulnerability (Foley and Manova, 2015;Li et al, 2020). The mechanisms generating these distortions hinge on the nature of the underlying financial frictions.…”

Section: 12mentioning

confidence: 99%

“…Risks increase the cost of finance and reduce the access to finance (Myers, 1984;Low and Chen, 2004). Consequently, this may lead to credit constraints which in turn affect international trade (Foley and Manova, 2015;Li et al, 2020). However, return on exporting investment is uncertain.…”

Section: Introductionmentioning

confidence: 99%

Export intensity of foreign subsidiaries of multinational enterprises

Nguyen

2022

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PurposeThe author contributes to the theory of the multinational enterprise by examining subsidiary-specific capability in financial management, defined as the stock of knowledge and capability to plan, manage, control and direct financial resources effectively and efficiently, and the perceptions of subsidiary managers of host country financial development as drivers of export intensity (the share of sales that are exported) of foreign subsidiaries of multinational enterprises (MNEs). The author theorizes that subsidiary-specific capability in financial management is conceptually a valuable subsidiary-specific advantage and it is as important as other traditional competitive advantages, such as research and development and marketing intensity. Perceptions of subsidiary managers of host country financial development are argued to be largely related to the characteristics of the host country-specific advantages.Design/methodology/approachThe author uses a survey dataset of the foreign subsidiaries of Western multinational enterprises (MNEs) together with other public data sources.FindingsThe author provides empirical evidence to support for these arguments that export intensity of MNE foreign subsidiaries depends on subsidiary-specific advantages and host country specific advantages.Originality/valueThe study broadens the understanding of the relationships between subsidiary-specific advantage in financial management, host country specific advantage, and export intensity of MNE foreign subsidiaries. In this way, the author makes an original contribution to new internalization theory by emphasizing the internal capability building of subsidiaries. The author discusses the implications of the findings for MNE foreign subsidiary managers, and policy makers because exporting is critical to the overall strategy of foreign subsidiaries, and it also contributes to the balance of trade and economic development of host countries where foreign subsidiaries operate.

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