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Financial Constraints and the Extensive and Intensive Margin of Firm Exports: Panel Data Evidence from C hina
Author(s) -
Egger Peter H.,
Kesina Michaela
Publication year - 2014
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/rode.12107
Subject(s) - margin (machine learning) , panel data , economics , debt ratio , work (physics) , point (geometry) , debt , monetary economics , china , finance , econometrics , political science , engineering , mechanical engineering , geometry , mathematics , machine learning , computer science , law
Some theoretical work suggests credit constraints to hamper exports while other work suggests that they deter firms' sales at large. Hence, credit constraints might reduce the export–sales ratio or not. This paper assesses the role of credit constraints for the export–sales ratio at the firm level. We explore this hypothesis empirically, using cross‐section and panel data on C hinese enterprises compiled by the National Bureau of Statistics of C hina. We approximate credit constraints by a firm's ratio of liquid debt to sales and, alternatively, the ratio of liquid assets to total assets. In particular, we estimate the impact of these financial fundamentals on the extensive and the intensive margins of firm‐level exports in two‐part fractional response models. Fixed effects panel regressions point to a negative relationship between export–sales ratios and credit constraints only at the extensive margin.