Heterogeneous firms, financial constraints and export behaviour: A firm-level investigation for China

World Economy ◽  
2017 ◽  
Author(s):  
Xiaobing Huang ◽  
Xiaolian Liu ◽  
Holger Görg
Keyword(s):  
Financial Constraints ◽  
Heterogeneous Firms ◽  
Firm Level ◽  
Export Behaviour

The Micro and Macro of Managerial Beliefs

2020 ◽  
Author(s):  
Jose Maria Barrero
Keyword(s):  
Rational Expectations ◽  
Asset Price ◽  
Heterogeneous Firms ◽  
Adjustment Costs ◽  
Consumer Welfare ◽  
Sales Growth ◽  
Firm Level ◽  
Managerial Decisions ◽  
Managerial Beliefs ◽  
Growth Volatility

This paper studies how biases in managerial beliefs affect managerial decisions, firm performance, and the macroeconomy. Using a new survey of US managers I establish three facts. (1) Managers are not over-optimistic: sales growth forecasts on average do not exceed realizations. (2) Managers are overprecise (overconfident): they underestimate future sales growth volatility. (3) Managers overextrapolate: their forecasts are too optimistic after positive shocks and too pessimistic after negative shocks. To quantify the implications of these facts, I estimate a dynamic general equilibrium model in which managers of heterogeneous firms use a subjective beliefs process to make forward-looking hiring decisions. Overprecision and overextrapolation lead managers to overreact to firm-level shocks and overspend on adjustment costs, destroying 2.1 percent of the typical firm’s value. Pervasive overreaction leads to excess volatility and reallocation, lowering consumer welfare by 0.5 to 2.3 percent relative to the rational expectations equilibrium. These findings suggest overreaction may amplify asset-price and business cycle fluctuations.

scholarly journals Trade credit, trade income elasticity and the international transmission of shocks

2021 ◽  
Author(s):  
Anna Watson
Keyword(s):  
International Trade ◽  
Open Economy ◽  
Trade Credit ◽  
Income Elasticity ◽  
Heterogeneous Firms ◽  
Firm Level ◽  
Macroeconomic Shocks ◽  
Cyclical Fluctuations ◽  
Irish Data ◽  
The Impact

AbstractThe paper examines the impact of trade credit on cyclical fluctuations in international trade. It provides new empirical evidence based on firm-level UK and Irish data showing that exporters use trade credit more actively and intensively than non-exporters. The study introduces inter-firm lending into an open economy general equilibrium model with heterogeneous firms and endogenous entry into the exports market. It demonstrates that trade credit amplifies the impact of macroeconomic shocks on international trade both along the intensive and extensive margins and that it significantly contributes to the high trade income elasticity observed in the data.

scholarly journals Financial constraint, trust, and export performances: firm-level evidence from Africa

2021 ◽  
pp. 1-23
Author(s):  
Maty Konte ◽  
Gideon Ndubuisi
Keyword(s):  
Financial Constraints ◽  
Interpersonal Trust ◽  
Negative Relationship ◽  
Financial Constraint ◽  
African Countries ◽  
Firm Level ◽  
Country Level ◽  
The World Bank ◽  
Negative Effect ◽  
Enterprise Surveys

Abstract Several existing studies have documented a negative relationship between firm financial constraint and export activities but do not attempt to examine factors that could attenuate this relationship in Africa. In this paper, we examine the effect of financial constraint on exports in Africa and explore how the level of trust in countries where firms are located shapes this relationship. We combine the World Bank Enterprise Surveys with different measures of country-level personal and interpersonal trust computed from the Afrobarometer surveys of 19 African countries. Our results show that financial constraints negatively affect export activities. However, this negative effect is attenuated for firms that are located in trust-intensive societies. These findings are robust to different specifications. Interestingly, we find that small and medium-sized enterprises in Africa are more likely to be affected by financial constraints but also more likely to benefit from a higher level of both personal and interpersonal trust, while for larger firms only interpersonal trust matters.

scholarly journals The Financing of Ideas and the Great Deviation

2017 ◽  
Vol 17 (176) ◽  
Author(s):  
Daniel Garcia-Macia
Keyword(s):  
Great Recession ◽  
Heterogeneous Firms ◽  
Intangible Capital ◽  
Model Matching ◽  
Slow Recovery ◽  
Firm Level ◽  
The Great Recession ◽  
Financing Costs ◽  
Speed Up ◽  
Intangible Investment

Why did the Great Recession lead to such a slow recovery? I build a model where heterogeneous firms invest in physical and intangible capital, and can default on their debt. In case of default, intangible assets are harder to seize by creditors. Hence, intangible capital faces higher financing costs. This differential is exacerbated in a financial crisis, when default is more likely and aggregate risk bears a higher premium. The resulting fall in intangible investment amplifies the crisis, and gradual intangible spillovers to other firms contribute to its persistence. Using panel data on Spanish manufacturing firms, I estimate the model matching firm-level moments regarding intangibles and financing. The model captures the extent and components of the Great Recession in Spanish manufacturing, whereas a standard model without endogenous intangible investment would miss more than half of the GDP fall. A policy of transfers conditional on firm age could speed up the recovery, as young firms tend to be more financially constrained, particularly regarding intangible investment. Conditioning transfers on firm size or subsidizing credit (as in current E.U. policy) appears to be less effective.

Measuring Firms' Financial Constraints

2020 ◽  
pp. 276-298
Author(s):  
Carlos Carreira ◽  
João Eira ◽  
Filipe Silva
Keyword(s):  
Financial Constraints ◽  
The Other ◽  
Empirical Literature ◽  
Surprising Result ◽  
Firm Level ◽  
Advantages And Disadvantages ◽  
Indirect Measures ◽  
Large Panel ◽  
Over Time

Measuring firms' financial constraints can prove to be a difficult task for researchers because it is not possible to directly observe whether a firm is financially constrained. This chapter surveys the existing methodologies to measure such constraints at firm level, discussing the advantages and disadvantages of each one. In doing so, firstly, the authors review the direct and indirect measures of firms' financial constraints. Then they test the validity of the most commonly used indices using a large panel of (unlisted) Portuguese firms (2010-2017). The FCP index seems to outperform the other indices in capturing financial constraints of unlisted SMEs. This is not a surprising result, as most of the existing empirical literature on the field deals with listed (US) firms. It is not reasonable to expect that the coefficients of indices remain unchanged across countries and over time. Therefore, the authors propose their (re)estimation to apply them to different economies.

Cash-in-advance, export decision and financial constraints: Evidence from cross-country firm-level data

2020 ◽  
Vol 69 ◽  
pp. 75-92
Author(s):  
Ngoc Thang Doan ◽  
Thi Kim Chi Vu ◽  
Thi Cam Thuy Nguyen ◽  
Thi Hong Hai Nguyen ◽  
Kieu Trang Nguyen
Keyword(s):  
Financial Constraints ◽  
Firm Level ◽  
Level Data ◽  
Firm Level Data ◽  
Cross Country ◽  
Export Decision ◽  
Cash In Advance

scholarly journals How Do Tax Incentives Affect Investment and Productivity? Firm-Level Evidence from China

2019 ◽  
Vol 11 (3) ◽  
pp. 261-291 ◽  
Author(s):  
Yongzheng Liu ◽  
Jie Mao
Keyword(s):  
Experimental Design ◽  
Financial Constraints ◽  
Tax Incentives ◽  
Capital Taxation ◽  
Firm Level ◽  
Positive Effects ◽  
Fixed Assets ◽  
Quasi Experimental ◽  
Major Reform ◽  
Investment In Fixed Assets

China initiated a major reform for capital taxation in 2004. Completed in 2009, it introduced permanent tax incentives for firms’ investment in fixed assets. We explore a unique firm-level dataset from years 2005–2012 and utilize a quasi-experimental design to test the impacts of the reform on firms’ investment and productivity. We find that, on average, the reform raised investment and productivity of the treated firms relative to the control firms by 38.4 percent and 8.9 percent, respectively. We also show that the positive effects tend to be strengthened for firms with financial constraints. (JEL D24, D25, G31, H25, O25, P31, P35)

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