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Financial Factors And The Margins Of Trade : Evidence From Cross-Country Firm-Level Data

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Executive Summary

Using a large cross-country, firm level database containing 5,000 firms in 9 developing and emerging economies, the authors study how financial factors affect both firms' export decisions and the amount exported by firm. First, the results stress an important impact of firms' access to finance on their entry decision into the export market. However, a better financial health neither increases the probability of remaining an exporter once the firm has entered, nor the size of exports. Second, they find that financial constraints create a disconnection between firms' productivity and their export status: productivity is a significant determinant of exporting decision only if the firm has a sufficient access to external finance.

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