%T Firm Exports and Multinational Activity Under Credit Constraints
%O This version is the version of record. For information on re-use, please refer to the publisher’s terms and conditions.
%P 574-588
%D 2015
%L discovery10043004
%N 3
%J The Review of Economics and Statistics
%V 97
%A K Manova
%A S-J Wei
%A Z Zhang
%X 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.