Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/93849 
Year of Publication: 
2010
Series/Report no.: 
SFB/TR 15 Discussion Paper No. 340
Publisher: 
Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY), München
Abstract: 
This paper explores the impact of financial constraints on the internationalization strategies of firms. It contributes to the literature by focusing on three aspects: First, the paper studies the impact of financial constraints on exporting relative to FDI. Consistent with theory, the empirical results confirm that the impact of financial constraints is stronger for FDI than for exporting. Second, the paper analyzes the extensive and the intensive margins and finds that financial frictions matter for both. Third, the paper explores the impact on manufacturing as compared to service industries and shows that firms in service industries are affected more than firms in manufacturing. The paper also identifies a threshold effect: Financial constraints do not matter for small firms whose productivity seems to be too low to consider international expansions.
Subjects: 
Multinational firms
exports versus FDI
financial constraints
JEL: 
F2
G2
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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