Banco Central de Chile Documentos de Trabajo Central Bank of Chile Working Papers

Using plant-level data from Chile’s manufacturing sector for the period 1990-2000, this paper examines the effect of financial development on the probability of exporting at the plant level, with a special focus on the heterogeneous responses of plants with different characteristics. The main results are that an improvement in financial development increases the probability of exporting of more productive plants and those with foreign ownership operating in manufacturing sectors that are more dependent on external finance. Our estimates also indicate that financial development does not appear to improve the probability of exporting for relatively smaller and younger plants. This result suggests that, at least for the case of exporting in Chile, smaller and younger plants are not necessarily more likely to benefit from improvements in access to credit than larger and older ones. Resumen Utilizando datos de plantas manufactureras en Chile durante el período 1990-2000, este trabajo analiza el efecto del desarrollo financiero sobre la probabilidad de exportar con énfasis en la respuesta heterogénea de las plantas. Los resultados muestran que el mayor desarrollo financiero de la economía chilena ha aumentado la probabilidad de exportar de las plantas más productivas y de aquellas de propiedad extranjera en sectores industriales que son más dependientes del financiamiento externo. En general, nuestros resultados no muestran que las plantas más nuevas y más pequeñas sean particularmente beneficiadas de una profundización del mercado financiero en Chile. * We would like to thank Rolando Campusano for excellent research assistance, and participants at the 6th Workshop of the International Study Group on Exports and Productivity (ISGEP) held at Leuphana University, Lüneburg, Germany, on September 28-30, 2011 for helpful comments on an earlier version of this paper.