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We analyze the relationship between financing constraints and firms' R&D activity using a rich and comprehensive firm-level balance sheet and income statement data set of manufacturing firms in Turkey for the period 1996 to 2013. Using a firm-specific, time-varying financing constraints index, we find that financing constraints have a negative relationship with firms' R&D activity, after controlling for other determinants of R&D such as firm size, capital intensity and export market participation.

This paper examines the link between financing constraints and firm exporting behavior through an in-depth study of the Turkish manufacturing firms between 1996 and 2013. Utilizing a rich firm-level data set, we test for both ex-ante and ex-post links between exports and financing constraints to tackle potential selection biases and endogeneity problems. We find a positive and statistically significant export premium for financing constraints in general. In further testing we show that there is no significant evidence of pre-entry premium, while we find that financing constraints faced by exporting firms are eased once they start exporting, confirming an improvement in the financial conditions of export starters compared to non-exporters.