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The growing demand for goods and technology increases capital requirements, especially in exporting enterprises. However, many firms have difficulty accessing external capital due to institutional obstacles. This study analyzes two main issues: the influence of institutional obstacles on credit constraints and the relationship between credit constraints and export decisions, adopting firm-level data from 131 countries. The study’s remarkable contribution is to cluster the data into four country groups based on their national income. The typical specification of each group can lead to more precise results, thereby highlighting the role of institutions. More advanced, this study complements the literature’s gap in the relationship between credit constraints and exports by controlling for institutions as interactive variables in the model. This work upgrades assessments to be more accurate, thereby providing more valuable information to policymakers. In addition, credit constraints are measured by both quantitative and qualitative methods. The essential role of firm size is emphasized in further analysis. This study approaches the Probit method. Furthermore, an instrumental variable is used to solve the endogeneity problem. The results found that a weak institution prevents access to finance, especially in middle-income countries. In addition, firms’ access to capital negatively affects exports in all regions. The finding in the group of rich countries is most pronounced.

Keywords: credit constraints; export; institutions; tax rate; political instability; corruption; business licensing and permit; World Bank data 2020; IV-Probit regression