The Role of Financial Access and Financial Development in Firm’s Exportability: Empirical Evidence from Asia-Pacific

PUBLICATION DATE: 13-11-2017
Author Name Durairaj Kumarasamy and Prakash Singh
Author Name: 
Durairaj Kumarasamy and Prakash Singh

Abstract: This study attempts to examine how access to finance and financial development affects firm’s ability to export in Asia–Pacific countries. Using firm level data from World Bank Enterprises Survey, we found that access to

finance plays an important role in promoting the firm’s export market entry. In addition, development in financial sector results into a higher likelihood of firm entering into export market. The effect of financial development is more

prominent in terms of reach of the banking sector. We also found that interplay between access to finance, financial development and location reduces the limiting effect of location on firm’s ability to export. The study suggests that

improvement in access-to finance and financial development (increase in reach of banking sector), firms operating away from capital or main cities would find export market entry easier. The study supports that strengthening financial

sector development would encourage firm’s exportability, and also emphasizes the need of access to finance to facilitate the firm’s exporting activities for remotely located places.

 

 

Keywords: Access to Finance, Exports, Financial Development, International

Trade,

JEL: D22, F14, O16, O53