HomeLibraryPublication

Financial constraint, trust, and export performances: Firm-level evidence from Africa

Maty Konte and Gideon Ndubuisi (2021)

Key facts

Journal/Publisher
Journal of Institutional Economics
Type of publication
Journal article
Elements of social cohesion
Trust
Geographical focus
Sub-Saharan Africa
Main thematic areas
Economic development

Summary

Several existing studies have documented a negative relationship between firm financial constraint and export activities but do not attempt to examine factors that could attenuate this relationship in Africa. In this paper, we examine the effect of financial constraint on exports in Africa and explore how the level of trust in countries where firms are located shapes this relationship. We combine the World Bank Enterprise Surveys with different measures of country-level personal and interpersonal trust computed from the Afrobarometer surveys of 19 African countries. Our results show that financial constraints negatively affect export activities. However, this negative effect is attenuated for firms that are located in trust-intensive societies. These findings are robust to different specifications. Interestingly, we find that small and medium-sized enterprises in Africa are more likely to be affected by financial constraints but also more likely to benefit from a higher level of both personal and interpersonal trust, while for larger firms only interpersonal trust matters.

Publication_2021_Maty Konte and Gideon Ndubuisi

Explore the hub further

graph_concept_Reconsidering social cohesion: Definition and analytical framework
Concept

Reconsidering social cohesion: Definition and analytical framework

graph_data_Social Cohesion in Asia: What holds Asian Societies together?
Data

Social Cohesion in Asia: What holds Asian Societies together?

graph_publication_A better life for all, Social cohesion and the governance of life in post-apartheid South Africa
Library

A better life for all, Social cohesion and the governance of life in post-apartheid South Africa

Fostering social cohesion and dialogue, in and between, Bosnia and Herzegovina, Montenegro and the Republic of Serbia (Dialogue for the Future)
Project

Fostering social cohesion and dialogue, in and between, Bosnia and Herzegovina, Montenegro and the Republic of Serbia (Dialogue for the Future)