SOURCES OF FINANCE AND EXPORT PERFORMANCE: EVIDENCE FROM THAI MANUFACTURING SMEs

Abstract

This study emphasizes the contribution of sources of finance to the export participation and export intensity of Thai manufacturing small and medium-sized enterprises (SMEs) and manufacturing firms in aggregate. It also elaborates on other key factors contributing to SME manufacturing firm export activity. The empirical results presented confirm that the Export–Import Bank of Thailand (EXIM Bank) and the Department of International Trade Promotion (DITP) both play a significant role in enhancing Thai SME and all manufacturing firm export participation and export intensity. Local and foreign commercial banks, however, are not found to have a significant correlation with their export participation and export intensity. In addition, SMEs and all manufacturing firms receiving funds from friends and family are found to participate less in foreign markets compared to those SMEs and all manufacturing firms in aggregate which do not receive any funds from their friends and family. With respect to the importance of type of ownership for export activity, foreign ownership can help promote the export participation and intensity of Thai manufacturing SMEs and all manufacturing enterprises. Technological innovation activity also helps them to participate in foreign markets. The empirical evidence also points out that financial institutions in Thailand remain reliant on collateral-based lending and financial transparency. A key finding from this paper is that manufacturing SMEs are likely to perform worse in terms of export participation, export intensity, and access to finance compared to large manufacturing enterprises.