On the relationship between trade credit and export survival

This paper investigates the effects of trade credit on export survival by using cross-country panel data with 41 countries from 1997 to 2014. The export survival rate is the ratio of the number of survivors to the entrants. Trade credit is defined as the net value received of the liabilities and claims arising from receiving or providing supplier credit and advance payment for transactions in goods and services. The empirical results indicate that net trade credit received by the exporters is positively associated with the possibility of export survival and that this effect is notably stronger for second- and third-year firms than for first-year entrants, for crisis and post-crisis periods compared with normal periods, and for cases where endogeneity problem is taken into account. These findings suggest that in order to enhance the sustainability of export flow, governments should employ policies to facilitate greater advance payment, especially during periods of financial distress.