Document Type

Article

Publication Date

1-2015

Publication Title

Applied Economics Letters

Volume

22

Abstract

This article finds that firms’ trade credit, the financing provided by upstream input suppliers along the supply chain, plays an important role in determining firms’ exportation. In a panel data set of manufacturing firms in 25 Eastern European and Central Asian countries between 2001 and 2007, we employ international trade cost shocks to identify the causal impacts of trade credit on firms’ exportation. We find that when trade costs decline, firms with less trade credit increase their exports disproportionately more because of the alleviation of their financing burdens. Results are robust after controlling for bank and other financing channels, country financial development, and the endogeneity of trade credit. Our findings contribute to the empirical identification of financial frictions on firms’ exports and to the role of trade credit on firms’ performance.

Issue

12

First Page

993

Last Page

998

DOI

10.1080/13504851.2014.995353

ISSN

1466-4291

Rights

This is an Accepted Manuscript of an article published by Taylor & Francis Group in Applied Economics Letters on 13/01/2015, available online: https://doi.org/10.1080/13504851.2014.995353

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