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 paper provides new evidence on the extent and dynamics of product and geographical diversification of constrained exporters. Financial constraints associates with: (i) narrower product/destination margins; (ii) higher probability to drop products and destinations, (iii) higher loss of export value associated to dropping product or destination markets; (iv) higher probability to discard products with relatively high share in firm total export values, and (v) higher likelihood to drop country markets that are bigger, richer, geographically closer and with a relatively high share in total firm export value.