Financial Inclusion and Foreign Market Participation of Firms: A Quasi-experiment from Nigeria

Efobi, Uchenna; Orkoh, Emmanuel; Atata, Scholastica Ngozi

doi:10.1007/978-3-319-78843-2_3

“…Harrison, Lin, & Xu (2022) reported that other key factors, such as lack of infrastructure, political competition, and firms' access to finance, define firms' growth and export performance. Efobi, Orkoh, & Atata (2018) found through a quasi-experiment that formal financial services increased firms' exports. In addition, the study argued that access to formal debt enhanced firms' export capacity.…”

Section: Discussionmentioning

confidence: 99%

Firms Financial Inclusion and Export Performance: Evidence from Manufacturing Sector Firms in Pakistan

Fareeha Adil,

Rabia Nazir

2023

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Financial inclusion of firms is crucial to create jobs, boost economic growth, and promote sustainable development. The study examines how financial inclusion affects enterprise export performance based on access to finance ratios. The study analyses the effects of firms’ financial inclusion determinants and macro environment factors on firms’ export values. The data comes from Pakistan’s manufacturing sector covering 400 firms listed on Pakistan Stock Exchange from 1999-2021. Driven by the nature of the data, the Method of Moment Quantile Regression is employed to assess the below and above mean regression estimations, and a two-step system GMM approach is used to address endogeneity concerns. The results of the study are robust against different specifications. The study reveals that assets positively impact a firm’s export performance, emphasising the importance of asset investment for foreign market competition. Asset tangibility negatively impacts export performance, except for low-gearing corporations, and fixed assets dominate. A balanced asset mix is crucial for improving exports. Debt-to-equity ratios, except for high-gearing firms, boost export performance, but domestic firms with high leverage ratios are more likely to fail. To avoid excessive leverage risks, firms must balance debt and equity. Diversifying the asset mix to include liquid and intellectual property can boost export success. Gearing affects export performance differently depending on a firm’s debt levels. Low-geared enterprises can leverage assets and debt to boost exports, while high-geared enterprises may be financially constrained and face challenges from excessive debt. Therefore, enterprises must carefully examine their gearing levels and make informed decisions on optimising their asset composition for optimal export performance. The study also opens up the possibility of further research on the role of exchange rates and firms’ investment in line with export performance.

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“…Likewise, Harrison, Lin, & Xu (2013) addressed key factors explaining Africa's economic performance. Efobi, Orkoh, & Atata (2018), using World Bank Enterprise data for Nigerian manufacturing firms, found through a quasi-experimental approach that using formal financial services increase firms' export. Silva (2011) analysed the effect of international trade on firms' financial health.…”

Section: Literature Reviewmentioning

confidence: 99%

Firms Financial Inclusion and Export Performance: Evidence from Manufacturing Sector Firms in Pakistan

Fareeha Adil,

Rabia Nazir

2023

pdr

0

View full text Add to dashboard Cite

Financial inclusion of firms is crucial to create jobs, boost economic growth, and promote sustainable development. The study examines how financial inclusion affects enterprise export performance based on access to finance ratios. The study analyses the effects of firms’ financial inclusion determinants and macro environment factors on firms’ export values. The data comes from Pakistan’s manufacturing sector covering 400 firms listed on Pakistan Stock Exchange from 1999-2021. Driven by the nature of the data, the Method of Moment Quantile Regression is employed to assess the below and above mean regression estimations, and a two-step system GMM approach is used to address endogeneity concerns. The results of the study are robust against different specifications. The study reveals that assets positively impact a firm’s export performance, emphasising the importance of asset investment for foreign market competition. Asset tangibility negatively impacts export performance, except for low-gearing corporations, and fixed assets dominate. A balanced asset mix is crucial for improving exports. Debt-to-equity ratios, except for high-gearing firms, boost export performance, but domestic firms with high leverage ratios are more likely to fail. To avoid excessive leverage risks, firms must balance debt and equity. Diversifying the asset mix to include liquid and intellectual property can boost export success. Gearing affects export performance differently depending on a firm’s debt levels. Low-geared enterprises can leverage assets and debt to boost exports, while high-geared enterprises may be financially constrained and face challenges from excessive debt. Therefore, enterprises must carefully examine their gearing levels and make informed decisions on optimising their asset composition for optimal export performance. The study also opens up the possibility of further research on the role of exchange rates and firms’ investment in line with export performance.

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“…However, few research has been done on financial inclusion in Nigeria. For instance, Efobi et al (2018) examine the impact of financial inclusion on the export capacity of firms in the manufacturing sector in Nigeria, and find that greater access to financial services increase the export capacity of firms, but the impact on each manufacturing firm depends on the location of the firm. Adegbite and Machethe (2020) analyse the gender gap in financial inclusion in Nigeria, and find that there is increasing gender gap in financial inclusion in Nigeria as more men had greater access to finance than women.…”

Section: Literature Reviewmentioning

confidence: 99%

Financial Inclusion in Nigeria: An Overview

Ozili¹

2022

International Journal of Banking and Finance

2

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This paper analyses the level of financial inclusion in Nigeria using data from the global findex indicators. The findings reveal that Nigeria witnessed growth in several financial inclusion indicators in the early years of financial inclusion in 2014, but the benefits were not sustained in the later years, especially in 2017. Nigeria’s level of financial inclusion is very low compared to the World average. In the population group analysis, it was observed that the female, poorest, male, older and uneducated members of the population were worse- off in all indicators of financial inclusion in 2017. The implication of the observed decline in the level of financial inclusion in 2017 seems to suggest that there are barriers to financial inclusion in the post-2014 years.

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Financial Inclusion and Foreign Market Participation of Firms: A Quasi-experiment from Nigeria

Cited by 4 publications

References 29 publications

Firms Financial Inclusion and Export Performance: Evidence from Manufacturing Sector Firms in Pakistan

Firms Financial Inclusion and Export Performance: Evidence from Manufacturing Sector Firms in Pakistan

Firms Financial Inclusion and Export Performance: Evidence from Manufacturing Sector Firms in Pakistan

Financial Inclusion in Nigeria: An Overview

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