Impact of Type of Export Finance on Firms’ Export Profitability : A Study of Industrial Clusters in Gujarat, India

Financing resources play a significant role in escalating export ventures particularly of MSMEs (Micro, Small and Medium Enterprises) which face a stiff competition from the larger firms. Finance is essential not only for successful operation of current activities of the firm but also aids in expanding those activities to grow the firms' business. There are several financing resources available at a firm's disposal viz. its own retained profits, commercial loans from banks, loans from specialised development institutions and funding agencies, etc. This study attempts to analyse the impact of specific financing resources used by MSME exporters on their export profitability. It is concluded that the funds sourced from commercial banks had a significant impact on firm's export performance followed by profits ploughed back into export operations. The effect of development finance sources from institutions such as EXIM bank, SIDBI, IFCI, etc., was, however, not very significant