Does easing access to foreign financing matter for firm performance?

Bose, U., Mallick, S. and Tsoukas, S. (2020) Does easing access to foreign financing matter for firm performance? Journal of Corporate Finance, 64, 101639. (doi: 10.1016/j.jcorpfin.2020.101639)

Abstract

The literature shows that rigid capital control policies adversely influence international trade, leading to external financial reforms in terms of greater cross-border access to financing, which, in turn, can stimulate aggregate productivity. However, the literature overlooks the relationships among access to external financing, firm-level productivity, and exporting performance. We fill this research gap by using a rich dataset of 11,612 Indian firms over the period 1988–2014 and study how a unique financial policy intervention affects firm performance. We establish a significant effect of capital-account liberalization through an export-oriented policy initiative on firms' productivity and, consequently, on their exporting activity. Finally, we find that the benefits of the policy reform are more pronounced for financially vulnerable firms characterized by either high debt or low liquidity.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Mallick, Professor Sushanta and Tsoukas, Professor Serafeim
• Authors: Bose, U., Mallick, S., and Tsoukas, S.
• College/School: College of Social Sciences > Adam Smith Business School > Accounting and Finance; College of Social Sciences > Adam Smith Business School > Economics
• Journal Name: Journal of Corporate Finance
• Publisher: Elsevier
• ISSN: 0929-1199
• ISSN (Online): 1872-6313
• Published Online: 11 May 2020
• Copyright Holders: Copyright © 2020 Elsevier B.V.
• First Published: First published in Journal of Corporate Finance 64: 101639
• Publisher Policy: Reproduced in accordance with the publisher copyright policy