Publication:
Why Liquidity Matters to the Export Decision of the Firm

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dc.contributor.authorChan, Rosanna
dc.date.accessioned2014-05-14T22:02:58Z
dc.date.available2014-05-14T22:02:58Z
dc.date.issued2014-04
dc.description.abstractUnder financial constraints, exporting may have less to do with productivity and more to do with financial resources. The established relationship between exporting and productivity would differ when examined through the lens of the working capital needs of the firm. The hypothesis that working capital matters in the firm's exporting decision is explored in two ways: first, by articulating a dynamic working capital model of the firm that incorporates the firm's export decision. Secondly, by testing the hypothesis empirically using a unique firm level dataset from Bangladesh, where issues of financial constraints are particularly acute. The model shows that productivity determines export status of the firm as long as it is not under financial constraints. However, under financial constraints, export status is less dependent on productivity and more dependent on the availability of working capital. Empirical results support the model's prediction. The relationship between exporting time and the need for greater liquidity is also borne out empirically as shown by a positive and significant correlation between the amount of working capital and the distance of export destination. An important policy implication from the analysis is that short term liquidity is critical in allowing productive firms to export and that access to finance may prevent the benefits of trade liberalization within a country to be fully realized.en
dc.identifierhttp://documents.worldbank.org/curated/en/2014/04/19404022/liquidity-matters-export-decision-firm
dc.identifier.doi10.1596/1813-9450-6839
dc.identifier.urihttps://hdl.handle.net/10986/18331
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 6839
dc.rightsCC BY 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectACCESS TO CREDIT
dc.subjectACCESS TO EXTERNAL FINANCE
dc.subjectACCESS TO FINANCE
dc.subjectACCESS TO FINANCIAL SERVICES
dc.subjectACCOUNTING
dc.subjectACCOUNTS RECEIVABLE
dc.subjectAGGREGATE DEMAND
dc.subjectALLOCATION OF CREDIT
dc.subjectAMOUNT OF CREDIT
dc.subjectAVERAGE PRODUCTIVITY
dc.subjectBINDING CONSTRAINT
dc.subjectBOND
dc.subjectBONDS
dc.subjectBORROWING
dc.subjectBORROWING REQUIREMENT
dc.subjectBUDGET CONSTRAINT
dc.subjectCASH ON HAND
dc.subjectCD
dc.subjectCOLLATERAL
dc.subjectCOMMERCIAL BANKS
dc.subjectCOMPARATIVE ADVANTAGE
dc.subjectCREDIT CARDS
dc.subjectCREDIT CONSTRAINTS
dc.subjectCREDIT LINE
dc.subjectCREDIT LINES
dc.subjectCURRENT ASSETS
dc.subjectDEBT
dc.subjectDEVELOPING COUNTRIES
dc.subjectDEVELOPMENT POLICY
dc.subjectDISCOUNT RATE
dc.subjectDOMESTIC MARKET
dc.subjectDOMESTIC MARKETS
dc.subjectECONOMIC DEVELOPMENT
dc.subjectECONOMIC GROWTH
dc.subjectEQUILIBRIUM MODELS
dc.subjectEXCHANGE RATE
dc.subjectEXPORTER
dc.subjectEXPORTERS
dc.subjectEXPORTS
dc.subjectEXTERNAL BORROWING
dc.subjectEXTRA WORKING CAPITAL
dc.subjectFINANCES
dc.subjectFINANCIAL ACCESS
dc.subjectFINANCIAL CRISIS
dc.subjectFINANCIAL HEALTH
dc.subjectFINANCIAL INFORMATION
dc.subjectFINANCIAL MARKETS
dc.subjectFINANCIAL RESOURCES
dc.subjectFINANCIAL SERVICES
dc.subjectFINANCIAL STRUCTURE
dc.subjectFINANCIAL SYSTEMS
dc.subjectFINANCING NEEDS
dc.subjectFIXED COST
dc.subjectFIXED COSTS
dc.subjectFOREIGN MARKETS
dc.subjectFOREIGN-OWNED COMMERCIAL BANKS
dc.subjectFUTURE RESEARCH
dc.subjectGENERAL EQUILIBRIUM
dc.subjectGENERAL EQUILIBRIUM MODELS
dc.subjectGLOBAL TRADE
dc.subjectGOVERNMENT SUBSIDIES
dc.subjectHOLDINGS
dc.subjectHOUSEHOLD SAVINGS
dc.subjectINFORMAL LENDERS
dc.subjectINPUT PRICE
dc.subjectINTEREST RATE
dc.subjectINTEREST RATES
dc.subjectINTERNAL FINANCE
dc.subjectINTERNAL FINANCING
dc.subjectINTERNAL FUNDS
dc.subjectINTERNATIONAL BANK
dc.subjectINTERNATIONAL FINANCE
dc.subjectINTERNATIONAL FINANCIAL STATISTICS
dc.subjectINTERNATIONAL MARKETS
dc.subjectINTERNATIONAL SALES
dc.subjectINTERNATIONAL TRADE
dc.subjectINVENTORIES
dc.subjectINVESTING
dc.subjectINVESTMENT CLIMATE
dc.subjectLENDERS
dc.subjectLETTERS OF CREDIT
dc.subjectLINE OF CREDIT
dc.subjectLIQUIDITY
dc.subjectLIQUIDITY CONSTRAINTS
dc.subjectLOAN
dc.subjectMARGINAL COST
dc.subjectMARGINAL VALUE
dc.subjectMONEY LENDER
dc.subjectMONOPOLISTIC COMPETITION
dc.subjectMOTIVATION
dc.subjectOPPORTUNITY COST
dc.subjectOPTIMIZATION
dc.subjectOVERDRAFT
dc.subjectOVERDRAFT FACILITIES
dc.subjectOVERDRAFT FACILITY
dc.subjectPHYSICAL CAPITAL
dc.subjectPOSITIVE COEFFICIENT
dc.subjectPRESENT VALUE
dc.subjectPRICE LEVELS
dc.subjectPRODUCTION COSTS
dc.subjectPRODUCTION FUNCTION
dc.subjectPRODUCTION FUNCTIONS
dc.subjectPRODUCTIVITY
dc.subjectPRODUCTIVITY INCREASES
dc.subjectRATE OF RETURN
dc.subjectRECEIPT
dc.subjectRETAINED EARNINGS
dc.subjectRETURNS
dc.subjectSALES REVENUE
dc.subjectSAVINGS
dc.subjectSHORT-TERM DEBT
dc.subjectSKILLED LABOR
dc.subjectTERM CREDIT
dc.subjectTOTAL COSTS
dc.subjectTOTAL FACTOR PRODUCTIVITY
dc.subjectTRADE CREDIT
dc.subjectTRADE LIBERALIZATION
dc.subjectTRANSACTION
dc.subjectTRANSACTION COSTS
dc.subjectTRANSPORT
dc.subjectTURNOVER
dc.subjectUNSKILLED LABOR
dc.subjectVARIABLE COSTS
dc.subjectWAGES
dc.subjectWARRANTS
dc.subjectWEALTH
dc.subjectWORKING CAPITAL
dc.subjectWTO
dc.titleWhy Liquidity Matters to the Export Decision of the Firmen
dspace.entity.typePublication
okr.crosscuttingsolutionareaJobs
okr.crossref.titleWhy Liquidity Matters to the Export Decision of the Firm
okr.date.disclosure2014-04-01
okr.date.doiregistration2025-04-10T07:23:15.400551Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2014/04/19404022/liquidity-matters-export-decision-firm
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticeSocial Protection and Labor
okr.globalpracticeFinance and Markets
okr.guid922561468013215465
okr.identifier.doi10.1596/1813-9450-6839
okr.identifier.externaldocumentum000158349_20140417162718
okr.identifier.internaldocumentum19404022
okr.identifier.reportWPS6839
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2014/04/17/000158349_20140417162718/Rendered/PDF/WPS6839.pdfen
okr.region.administrativeSouth Asia
okr.region.countryBangladesh
okr.topicFinance and Financial Sector Development::Access to Finance
okr.topicBanks and Banking Reform
okr.topicSocial Protections and Labor::Labor Policies
okr.topicEconomic Theory and Research
okr.topicFinance and Financial Sector Development::Debt Markets
okr.topicMacroeconomics and Economic Growth
okr.unitFinance and Private Sector Unit, South Asia Region
okr.volume1 of 1
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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