Credit constraints and firm export: Microeconomic evidence from Italy

This paper estimates the impact of credit rationing on firms' export. We use detailed survey data from Italian manufacturing firms that provide a firm-specific measure of credit rationing based directly on firms' responses to the survey rather than indirectly on firms' financial statements. After controlling for productivity and other relevant firm attributes, and accounting for the endogeneity of credit rationing, we find that the probability of exporting is 39% lower for rationed firms and that rationing reduces foreign sales by more than 38%. While credit rationing also appears to depress domestic sales, its impact on foreign sales is significantly stronger. The analysis also suggests that credit rationing is an obstacle to export especially for firms operating in high-tech industries and in industries that heavily rely on external finance.