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Firms’ Financial Constraints and Exporting Tendency in Pakistan
Abstract
The financial constraints hinder firms’ operations and growth by limiting their access to working capital and funds for investment. The current study focuses on the effect of financial constraints on firms’ exporting tendency in Pakistan. The logistic regression is employed on the data set taken from World Enterprise Survey to find the probability of firms’ exporting tendency. The results indicate that financial constraints and their severity negatively affect firms’ exporting tendency while firm’s age, size and firms having formally trained employees increase the exporting tendency. The manufacturing sector firms are more probable to increase the exports as compared to services sector firms. The interaction effect of financial constraints and domestic firm has negative effect on exporting tendency which reflects that domestic firms are facing severe financial constraints for their exports as compared to foreign firms. Similarly, the interaction effect of financial constraints and manufacturing firm has negative effect on exporting tendency which explains that manufacturing sector is facing more financial constraints as compared to services sector. There is a need for financial access to promote the firms’ exporting tendency particularly for the domestic firms and manufacturing sector firms
Authors
Syed Mumtaz Ali Kazmi
Ph.D. Scholar, Department of Economics, The Islamia University of Bahawalpur, Punjab, Pakistan
Syed Muhammad Imran
Visiting Lecturer, Department of Economics, The Islamia University of Bahawalpur, Pakistan
Rana Ejaz Ali Khan
Professor and Chairman, Department of Economics, The Islamia University of Bahawalpur, Pakistan
Keywords
Exports, Financial Constraints, Human Capital, World Enterprise Survey
