A stitch in time: access to finance and the export ascent of saudi SMEs

Purpose – This study aims to examine how access to finance shapes both export participation and export intensity among Saudi small and medium-sized enterprises (SMEs), distinguishing bank and non-bank formal finance, alternative finance and binding credit constraints. Design/methodology/approach – Using firm-level data from the 2023 World Bank Enterprise Survey and estimating probit and instrumental variable probit models, we disentangle the effects of different financing channels on export likelihood while addressing endogeneity. Moreover, we estimate fractional probit and instrumental variable fractional probit models to disentangle the effects of different financing channels on export shares. Findings – The results show that stringent credit constraints significantly reduce the probability of SMEs exporting, whereas formal credit exhibits no positive effect, and in some cases, a negative one, on export activity. By contrast, conventional bank loans and broader access to external funding, including trade finance and overdraft facilities, correlate positively with exporting in standard models but lose significance or turn negative once endogeneity is considered, suggesting such finance often serves as a last resort for constrained firms. Originality/value – Situated in an emerging-economy setting, this work advances trade-finance scholarship by showing that the quality and fit of financing, rather than aggregate credit volumes, drive export outcomes. It calls for targeted, SME-friendly and culturally compatible financing instruments, such as Islamic trade finance and credit guarantees, to bridge the gap between financial inclusion and global market integration.