Abstract

This article uses firm-level data for the period 1995-2002 to examine whether access to finance increases the probability of exporting of Chilean manufacturing plants. We exploit information on firms' access to banking debt and changes in the real exchange rate (RER) to identify the causal effect of finance on exporting. This is an interesting case to study. The Chilean economy experienced a sustained RER depreciation since 1999, which increased export profitability. We use this episode as a quasi-experiment to study the impact of access to banking finance on exporting. Our results show that RER depreciations increase the probability of exporting for firms with access to banking finance and especially for firms in industries with higher financial needs. These results are robust to controlling for other firm characteristics affecting the probability of exporting and also for time varying industry-specific shocks that may affect export performance and banking finance.