Abstract
Recent models of trade with heterogeneous …rms argue that a …rm's productivity has a signi…cant eect on the …rm's exports. This paper examines how a …rm's credit constraints, jointly with its productivity, aect its export decisions. We embed the …rm's credit constraints into a Melitz-type general-equilibrium model by making the probability of the success of …rm-speci…c projects endogenous. We show that, all else equal, …rms are easier to enter the export market and export more, (1) if the prob- ability of the success of the …rm's project is higher, which provides the …rm easier access to external …nance from …nancial intermediaries; (2) or if the …rm has alter- native sources for obtaining funds, aside from …nancial intermediaries. We test these theoretical hypotheses using …rm-level data from Chinese manufacturing industries and …nd strong evidence supporting the predictions of the model.
Submitted Version (
Free)
Published Version
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call