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Firm Exports and Multinational Activity Under Credit Constraints

Manova, K; Wei, S-J; Zhang, Z; (2015) Firm Exports and Multinational Activity Under Credit Constraints. The Review of Economics and Statistics , 97 (3) pp. 574-588. 10.1162/REST_a_00480. Green open access

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Abstract

We provide firm-level evidence that credit constraints restrict international trade and affect the pattern of multinational activity. We show that foreign affiliates and joint ventures in China have better export performance than private domestic firms in financially more vulnerable sectors. These results are stronger for destinations with higher trade costs and not driven by firm size or other sector characteristics. Our findings are consistent with multinational subsidiaries being less liquidity constrained because they can access foreign capital markets or funding from their parent company. They further suggest that FDI can alleviate the impact of domestic financial market imperfections on trade.

Type: Article
Title: Firm Exports and Multinational Activity Under Credit Constraints
Open access status: An open access version is available from UCL Discovery
DOI: 10.1162/REST_a_00480
Publisher version: http://dx.doi.org/10.1162/REST_a_00480
Language: English
Additional information: This version is the version of record. For information on re-use, please refer to the publisher’s terms and conditions.
URI: http://discovery.ucl.ac.uk/id/eprint/10043004
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