OVERSEAS MARKET INFORMATION AND FIRMS' EXPORT DECISIONS

• Published in: Economic inquiry Vol. 53; no. 3; pp. 1671 - 1688
• Main Authors: Inui, Tomohiko, Ito, Keiko, Miyakawa, Daisuke
• Format: Journal Article
• Language: English
• Published: Boston, USA Wiley Periodicals, Inc 01.07.2015; Blackwell Publishers Ltd; Western Economic Association
• Subjects: Analysis; Banks; Business enterprises; Decision making; Exports; Foreign markets; Growth rates; Information management; Information sharing; International markets; Management; Marginalism; Safety and security measures; Spillovers; Statistics; Studies; United States; Japan
• ISSN: 0095-2583; 1465-7295
• DOI: 10.1111/ecin.12211

This paper examines how firms' decision to start exporting is affected by the availability of information on export markets. Unlike existing studies that focus on information sharing among firms, we are interested in the information provided by firms' main bank. Specifically, using a unique data set containing information on both Japanese firms' export activities and the experience of their main bank (i.e., their top lender bank) in transacting with other exporting firms, we examine whether main banks act as a conduit of information on export markets. We find that information spillovers through main banks positively affect client firms' decision to start exporting (extensive margin), implying that information on foreign markets provided by banks substantially reduces the fixed entry cost of exporting. On the other hand, we do not find any evidence that information provided by banks has an effect on the export volume or on the growth rate of exports (intensive margin). Our results highlight that channels of information spillovers other than those examined in the literature so far may be of considerable importance. (JEL F10, F14, G21)