Firm Exports and Multinational Activity
under Credit Constraints
Kalina Manova*
Stanford University and NBER
Shang-Jin Wei
Columbia University, CEPR, CIER and NBER
Zhiwei Zhang
Nomura Securities
Abstract. We provide firm-level evidence that credit constraints restrict international trade
and affect the pattern of multinational activity. We show that foreign affiliates and joint
ventures in China have better export performance than private domestic firms in financially
more vulnerable sectors. These results are stronger for destinations with higher trade costs
and not driven by firm size or other sector characteristics. Our findings are consistent with
multinational subsidiaries being less liquidity constrained because they can access foreign
capital markets and/or funding from their parent company. They further suggest that FDI
can alleviate the impact of domestic financial market imperfections on trade.

RES_Firm Exports and Multinational Activity under Credit Constraints