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Firms’ access to finance, export trade channels and exports in Africa

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Abstract

The paper examines the effects of export trade channels and access to finance on exports in Africa. We employ mixed-effect regression and the dynamic system Generalized Method of Moments (GMM) for a panel dataset of 46 African economies over the period, 2006–2020. First, it contributes to the literature by employing subjective measures of export channels and shows how different measures of access to finance affect them. Second, it examines the direct and independent effect of access to finance and export channels on exports (export intensity and export status). Finally, the study interacts export channels with access to finance to examine their impacts on exports (export intensity and export status). We find that access to finance is more effective in promoting direct export trade channels and hybrid export trade channels compared to indirect export trade channels. We show that small and medium enterprises’ (SMEs’) access to bank finance leads to an increase in the level of exports. We also find that direct and hybrid export channels increase the level of exports, while indirect export channels result in a decline in the level of exports. We provide evidence to support that access to finance complements the overall effect of export trade channels on the level of exports, hence, an increase in the use of specific export trade channels increases the level of exports when SMEs have access to bank finance.

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Fig. 1
Fig. 2

Source: Authors’ construction based on data from the World Bank Enterprise Survey

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Availability of data and materials

The datasets used and/or analyzed during the current study are available (with the corresponding author) upon reasonable request.

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Acknowledgements

The authors are grateful to the staff of the African Export-Import Bank, faculty members of the University of Ghana Business School, FEPS, and EBID for their criticism and comments which helped improve the quality of this paper.

Funding

This study received no financial support from any institution or person. The study was carried out as a result of collaborative efforts by authors without any direct or indirect support from any institution.

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Authors and Affiliations

  1. University of Ghana Business School, P.O. Box LG, 78, Legon-Accra, Ghana

    Joshua Yindenaba Abor & Daniel Ofori-Sasu

  2. Faculty of Economics and Political Sciences (FEPS), Cairo University, Giza, Egypt

    Amira El-Shal

  3. ECOWAS Bank for Investment and Development, EBID, Lomé, Togo

    George Nana Agyekum Donkor

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  1. Joshua Yindenaba Abor
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  2. Daniel Ofori-Sasu
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Contributions

Joshua Yindenaba Abor is a Professor of Finance and the former Dean of the University of Ghana Business School. Daniel Ofori-Sasu holds a PhD in Finance from the University of Ghana Business School (UGBS), and he is a lecturer in the Department of Finance at the Business School, UGBS. Amira El-Shal is an Associate Professor, in the Faculty of Economics and Political Sciences (FEPS) at Cairo University. George Nana Agyekum Donkor is the President of ECOWAS Bank for Investment and Development (EBID), Togo. This is an original manuscript prepared by us which we have decided to submit to this journal for consideration and possible publication. The paper has not been previously published and that it is not currently under consideration elsewhere. Joshua Yindenaba Abor (lead author) conceptualized the idea, supervised it, and provided a comprehensive understanding of the area. He provided guidance, direction, review, and editing of this paper. Daniel Ofori-Sasu (corresponding author) is a key contributor to the study, he is involved in the conceptualization of the paper and wrote the paper as a researcher in finance, economics, and business development issues. Amira El-Shal conceptualized the idea of the paper and provided review and editing for this paper. George Nana Agyekum Donkor supervised and provided a review of the paper. All authors have read and approved the final manuscript.

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Correspondence to Daniel Ofori-Sasu.

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Abor, J.Y., Ofori-Sasu, D., El-Shal, A. et al. Firms’ access to finance, export trade channels and exports in Africa. IJEPS (2024). https://doi.org/10.1007/s42495-024-00135-1

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