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Grupo de Estudos Monetários e Financeiros

Estudos do GEMF, N.º 13 de 2011


Financial Constraints and Exports: An Analysis of Portuguese Firms

During the European Monetary Integration

(Publicado em Notas Económicas 34: 35-56, 2011)

Filipe Silva
Faculdade de Economia/GEMF, Universidade de Coimbra

Carlos Carreira
Faculdade de Economia/GEMF, Universidade de Coimbra

Financial constraints are a key determinant that hinders firms' ability to export. This paper analyses the nexus between these constraints and firms' engagement in international trade, as well as it explores the impact of the European monetary integration process upon firms' financial constraints. Therefore, we estimate cash to cash-flow sensitivities for different periods (1996-2000 and 2001-2004) and different groups of firms, according to their exporting and importing activity. Our results indicate that, depending on their international openness, the European monetary integration seems to have generally helped reducing the degree of financial constraints faced by Portuguese firms. Additionally, our findings suggest that, rather than unconstrained firms self-selecting into exporting, firms' constraints were reduced after they started exporting.

JEL Classification: D92; F14, F36, G32; L00; L2.

Financial constraints; Exports; European financial integration; Firm-level studies; Portugal.

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