The micro patterns of export diversification under financial constraints

Combining detailed data on export transactions and an informative firm-level measure of financing constraints, this article provides new evidence on the extent and dynamics of product and geographical diversification of constrained exporters. Financial constraints associate with: (i) narrower product/destination margins, (ii) higher probability to drop products and destinations, (iii) larger loss of export value associated to dropping product or destination markets, (iv) higher probability to discard products with relatively large share in firm total export values, and (v) larger likelihood to drop country markets that are bigger, richer, geographically closer and with a relatively larger share in total firm export value.