Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/112742
Authors: 
Ciani, Andrea
Bartoli, Francesca
Year of Publication: 
2015
Series/Report no.: 
DICE Discussion Paper 191
Abstract: 
This paper studies whether credit constraints affect the decision of small and medium size enterprises (SMEs) to upgrade the quality of their exported output with respect to the one sold domestically. We use a detailed firm-level data-set on Italian SMEs reporting information on output characteristics, credit rationing and international activities. Employing .rm credit scores used by banks for their lending decisions, we assess how credit constraints affect export quality upgrading. First, we find that exporting firms are less likely to upgrade output quality, when their credit score worsens. A one standard deviation worsening in the credit score lowers the probability of quality upgrading by more than 35 percent. Second, firms exporting to distant markets cut quality upgrading more sharply when their score worsens. The negative impact of credit constraints is confirmed when taking into account firm heterogeneity in size and other relevant .rm attributes. The main result is robust to endogeneity considerations of the credit score. Overall, our findings suggest that, by impacting export quality upgrading, credit constraints may affect the intensive margin of trade.
Subjects: 
Credit Constraints
Product Quality
Distance
International Trade
JEL: 
F10
F14
L15
G20
G32
ISBN: 
978-3-86304-190-8
Document Type: 
Working Paper

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