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Zhiwei Zhang
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Journal Articles
Publisher: Journals Gateway
The Review of Economics and Statistics (2015) 97 (3): 574–588.
Published: 01 July 2015
Abstract
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We provide firm-level evidence that credit constraints restrict international trade and affect the pattern of multinational activity. We show that foreign affiliates and joint ventures in China have better export performance than private domestic firms in financially more vulnerable sectors. These results are stronger for destinations with higher trade costs and not driven by firm size or other sector characteristics. Our findings are consistent with multinational subsidiaries being less liquidity constrained because they can access foreign capital markets or funding from their parent company. They further suggest that FDI can alleviate the impact of domestic financial market imperfections on trade.
Includes: Supplementary data