Time-Varying Impacts of Financial Credits on Firm Exports: Evidence from Trade Deregulation in China

42 Pages Posted: 8 Aug 2017 Last revised: 20 Oct 2017

See all articles by Dong Cheng

Dong Cheng

Vanderbilt University

Zhongzhong Hu

University of International Business and Economics (UIBE)

Yong Tan

Nanjing University of Finance and Economics

Date Written: August 6, 2017

Abstract

This paper investigates the heterogeneous and time-varying effects of financial credits on firm-level export performance. China's WTO accession leads to trade deregulation, which encourages a vast number of small domestic private firms to switch their exporting mode from indirect (through intermediaries) to direct exporting. Using a data set covering comprehensive Chinese manufacturing firms and employing a difference-in-differences approach (DID), we find that financial credits improve firm-level exports and productivity more for firms that switch from indirect to direct exporting than continuous indirect exporting firms. Further, we employ a difference-in-difference-in-differences (DDD) approach and find that improvements in firm-level internal and external finance have larger positive impacts on firm export values in the post-WTO accession period, conditioning on the firm switching from indirect to direct exporting. The time-varying impact may suggest an export distortion in China before its WTO accession, which prevents more productive but financially constrained small private domestic firms from direct exporting.

Keywords: Financial Credits, Exporting Mode, Difference-in-Differences

JEL Classification: F13, F14, F61, G20, G28

Suggested Citation

Cheng, Dong and Hu, Zhongzhong and Tan, Yong, Time-Varying Impacts of Financial Credits on Firm Exports: Evidence from Trade Deregulation in China (August 6, 2017). Available at SSRN: https://ssrn.com/abstract=3014528 or http://dx.doi.org/10.2139/ssrn.3014528

Dong Cheng (Contact Author)

Vanderbilt University ( email )

VU Station B, Box #351819
2301 Vanderbilt Place
Nashville, TN 37235
United States

Zhongzhong Hu

University of International Business and Economics (UIBE) ( email )

10, Huixin Dongjie
Changyang District
Beijing, Beijing 100029
China

Yong Tan

Nanjing University of Finance and Economics ( email )

Nanjing
China

Register to save articles to
your library

Register

Paper statistics

Downloads
15
Abstract Views
152
PlumX