Chan, Rosanna2014-05-142014-05-142014-04https://hdl.handle.net/10986/18331Under 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-USCC BY 3.0 IGOACCESS TO CREDITACCESS TO EXTERNAL FINANCEACCESS TO FINANCEACCESS TO FINANCIAL SERVICESACCOUNTINGACCOUNTS RECEIVABLEAGGREGATE DEMANDALLOCATION OF CREDITAMOUNT OF CREDITAVERAGE PRODUCTIVITYBINDING CONSTRAINTBONDBONDSBORROWINGBORROWING REQUIREMENTBUDGET CONSTRAINTCASH ON HANDCDCOLLATERALCOMMERCIAL BANKSCOMPARATIVE ADVANTAGECREDIT CARDSCREDIT CONSTRAINTSCREDIT LINECREDIT LINESCURRENT ASSETSDEBTDEVELOPING COUNTRIESDEVELOPMENT POLICYDISCOUNT RATEDOMESTIC MARKETDOMESTIC MARKETSECONOMIC DEVELOPMENTECONOMIC GROWTHEQUILIBRIUM MODELSEXCHANGE RATEEXPORTEREXPORTERSEXPORTSEXTERNAL BORROWINGEXTRA WORKING CAPITALFINANCESFINANCIAL ACCESSFINANCIAL CRISISFINANCIAL HEALTHFINANCIAL INFORMATIONFINANCIAL MARKETSFINANCIAL RESOURCESFINANCIAL SERVICESFINANCIAL STRUCTUREFINANCIAL SYSTEMSFINANCING NEEDSFIXED COSTFIXED COSTSFOREIGN MARKETSFOREIGN-OWNED COMMERCIAL BANKSFUTURE RESEARCHGENERAL EQUILIBRIUMGENERAL EQUILIBRIUM MODELSGLOBAL TRADEGOVERNMENT SUBSIDIESHOLDINGSHOUSEHOLD SAVINGSINFORMAL LENDERSINPUT PRICEINTEREST RATEINTEREST RATESINTERNAL FINANCEINTERNAL FINANCINGINTERNAL FUNDSINTERNATIONAL BANKINTERNATIONAL FINANCEINTERNATIONAL FINANCIAL STATISTICSINTERNATIONAL MARKETSINTERNATIONAL SALESINTERNATIONAL TRADEINVENTORIESINVESTINGINVESTMENT CLIMATELENDERSLETTERS OF CREDITLINE OF CREDITLIQUIDITYLIQUIDITY CONSTRAINTSLOANMARGINAL COSTMARGINAL VALUEMONEY LENDERMONOPOLISTIC COMPETITIONMOTIVATIONOPPORTUNITY COSTOPTIMIZATIONOVERDRAFTOVERDRAFT FACILITIESOVERDRAFT FACILITYPHYSICAL CAPITALPOSITIVE COEFFICIENTPRESENT VALUEPRICE LEVELSPRODUCTION COSTSPRODUCTION FUNCTIONPRODUCTION FUNCTIONSPRODUCTIVITYPRODUCTIVITY INCREASESRATE OF RETURNRECEIPTRETAINED EARNINGSRETURNSSALES REVENUESAVINGSSHORT-TERM DEBTSKILLED LABORTERM CREDITTOTAL COSTSTOTAL FACTOR PRODUCTIVITYTRADE CREDITTRADE LIBERALIZATIONTRANSACTIONTRANSACTION COSTSTRANSPORTTURNOVERUNSKILLED LABORVARIABLE COSTSWAGESWARRANTSWEALTHWORKING CAPITALWTO10.1596/1813-9450-6839