Why Liquidity Matters to the Export Decision of the Firm

Chan, Rosanna

World Bank, Washington, DC

关键词: ACCESS TO CREDIT;    ACCESS TO EXTERNAL FINANCE;    ACCESS TO FINANCE;    ACCESS TO FINANCIAL SERVICES;    ACCOUNTING;   

DOI  :  10.1596/1813-9450-6839
RP-ID  :  WPS6839

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Under financial constraints, exportingmay have less to do with productivity and more to do withfinancial resources. The established relationship betweenexporting and productivity would differ when examinedthrough the lens of the working capital needs of the firm.The hypothesis that working capital matters in thefirm's exporting decision is explored in two ways:first, by articulating a dynamic working capital model ofthe firm that incorporates the firm's export decision.Secondly, by testing the hypothesis empirically using aunique firm level dataset from Bangladesh, where issues offinancial constraints are particularly acute. The modelshows that productivity determines export status of the firmas long as it is not under financial constraints. However,under financial constraints, export status is less dependenton productivity and more dependent on the availability ofworking capital. Empirical results support the model'sprediction. The relationship between exporting time and theneed for greater liquidity is also borne out empirically asshown by a positive and significant correlation between theamount of working capital and the distance of exportdestination. An important policy implication from theanalysis is that short term liquidity is critical inallowing productive firms to export and that access tofinance may prevent the benefits of trade liberalizationwithin a country to be fully realized.