Export Decision and Formal Credit Constraints - Evidence in Vietnamese Small and Medium Enterprises

Export participation and restricted access to external formal credit are two factors attracting meticulous attention from researchers and policymakers, especially in developing countries. Exploring the interactive relationship of these factors in both the static and dynamic models is the purpose of this study. The study uses data sets from small and medium-sized manufacturing enterprises (SMEs) in Vietnam for the period 2009 - 2015. The instrumental variable approach is implemented to deal with the endogenous variable problem in the model. The results show an effect of credit constraint on the firms’ exporting status, and continuous exports are likely to reduce the limit of credit constraint.