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" Credit Constraints, Exports, and Green Technology: An Empirical Study of Manufacturing Firms in Bangladesh "
Rashid, Sungida
Lahiri, Sajal
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Latin Dissertation
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| Language of Document
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English
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| Record Number
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1052197
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| Doc. No
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TL51314
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| Main Entry
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Rashid, Sungida
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| Title & Author
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Credit Constraints, Exports, and Green Technology: An Empirical Study of Manufacturing Firms in Bangladesh\ Rashid, SungidaLahiri, Sajal
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| College
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Southern Illinois University at Carbondale
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| Date
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2019
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| Degree
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Ph.D.
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| student score
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2019
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| Note
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88 p.
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| Abstract
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We investigate different aspects of financial constraints that firms in Bangladesh face and their significant determinants. In our research, we use the standardized firm-level data collected by World Bank’s Enterprise Surveys over the period of 2007 to 2013. During that period the World Bank conducted 3 surveys on randomly selected firms in different location of Bangladesh and the total sample size is around 3200 firms, of which around 600 firms were common in all three survey years. Bangladesh is an interesting country for our study for two reasons. Firstly, very few studies considered low-income countries as their reference country. Moreover, most of the literature considered cross-country analysis where the possibility of regional variation within a country was omitted. Secondly, Bangladesh is on verge of graduation from LDC towards a developing nation based on preassigned criterions set by Secretariat of the UN Committee for Development Policy. The major obstacle an exporting firm of developing country face is scarce and underdeveloped financial support. Our research mainly focuses on how firms regardless of size and location and other attributes can significantly minimize the likelihood of credit constraints including credit rationing. Our findings suggest that lenders not only prefer exporting firms, but financially vulnerable firms can also a lower probability of rationing by entering the international market. Also, we try to investigate whether exporting firms are more inclined towards maintaining products quality and environmental regulation and it is interrelated with being financially constrained. For statistical analysis, we apply conditional logit and probit model with different fixed effects like location, sector, year, etc. and conditional mixed process. Our first chapter considers the supply side of the financial market. The literature has established that financially sound firms are more likely to trade but does the opposite also hold? Do lenders also prefer exporting firms more? This paper analyzes whether the firm’s exporting decision is most import for fund availability. We divided the firm’s exporting decision into two components: direct and indirect export and found that there exists a regional variation in exporting decision and credit availability in Bangladesh. Even though, Chittagong is the port city and major industrial hub of the country; firms located there are found to be less preferred by the lenders compared to other locations of Bangladesh. But analysis gives coherent results when we exclude food sector from the sample. In the second chapter, we investigate a specific type of credit constraint i.e. credit rationing. How firms can minimize the probability of being rationed? We focus on the association between credit rationing and indicators of financial unsoundness and higher future prospects. We approximate the firm’s financial unsoundness by two indicators; leverage ratio and liquidity ratio and higher future prospects by higher labor productivity. Our results show that lenders response profoundly towards negative signals than positive ones. We also find how firms can lower the rationing possibility when they are financially unsound. The interaction terms between export decision, relationship with banks and indicators of financial constraints clearly give the support for the hypothesis of lenders inclination towards exporters. Attributes like innovation and external auditing are also statistically seemed to be preferred by the lenders. In the third chapter, we consider whether exporting firms are more willing to maintain product quality and environmental protection in the presence of financial obstacles. We try to investigate how to export decision, financial constraints and environmental factors affect each other. We categorize firms into five different categories based on the degree of financial obstacles they face. We consider firms with ISO 9000 or 1400 or HAPC as an indicator of positive approach towards quality and environment protection. To support our hypothesis, we estimate a system of equation and try to explain their magnitude and direction of interaction when we allow them to interact simultaneously. Our results suggest that the predicted probability of getting an ISO certificate is 0.39 times greater for a firm facing major to severe financial constraints than the fewer constraint ones.
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| Descriptor
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Economics
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South Asian studies
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| Added Entry
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Lahiri, Sajal
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Southern Illinois University at Carbondale
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