Financial constraints and foreign market entries or exits: firm-level evidence from France
Philippe Askenazy, Aida Caldera, Guillaume Gaulier and Delphine Irac
Financial constraints are often cited by business as one of the brakes on exports. However, public authorities offer a number of support mechanisms and financial aids to firms, which help them to make gains in new foreign markets.
In this article, Askenazy, Caldera, Gaullier and Irac study the question using data dating from before the 2008 crisis. Do credit constraints affect the number of destinations served by French exporters? More precisely, what is their impact on entries to and exits from external markets? Financial constraints can weigh against gaining new markets or sustaining existing ones in a given country. In the second case, limitations to accessing finance speed up exits from markets; in the first case, however, they reduce the likelihood of exit, since firms anticipate that there will be difficulties in returning to this market in the future. The article details the empirical results achieved using data from the Banque de France and Customs bureau; the data cover the majority of French exports, for the period 1993-2007. The first mechanism – that of an exit from a market following credit depletion – dominates. Ultimately, the authors recommend a reorientation of public policy from the simple winning of new destinations towards support mechanisms that help in the maintenance of existing external markets.
Original title of the article : Financial constraints and foreign market entries or exits: firm-level evidence from France
Published in : Review of World Economics, January 2015
Available at : http://link.springer.com/article/10.1007/s10290-014-0206-5#
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