Trade and access to finance of Smes : is there a nexus?

Abstract EN

Limited resources and barriers to entry are critically higher for small and medium enterprises (SMEs) than for large companies.

One of the reasons explaining why the resources of SMEs are scarce is their limited access to financial services.

This, in turn, reduces their likelihood of exporting.

With this in mind, using the census of SMEs done by the Central Bank of Egypt and the Egyptian Banking Institute (EBI), we try to examine the impact of access to finance on SMEs’ export performance.

We measure the latter by the extensive margin that means the probability of becoming an exporter and the probability of serving several markets.

We found a significant and positive impact on the probability of exporting and that of exporting to more than one destination from dealing with banks and having banking facilities.

Thus, wider and more efficient financial services are likely to increase the number of exporters and boost exports diversification.