Exports, Productivity, and Credit Constraints: A Firm-Level Empirical Investigation of China
AbstractRecent Melitz-type (2003) intra-industry heterogonous trade models argue that a firmfs productivity has significant effects on the firmfs exports. This paper examines how a firmfs credit constraints as well as its productivity affect its export decisions. We imbed the firmfs credit constraints into a Melitz-type general-equilibrium model by endogenizing the probability of the success of firm-specific projects. We show that, all else equal, it is easier for firms to enter the export market if (1) the probability of the success of their project is higher and consequently they have easier access to external finance from financial intermediaries; or (2) they have alternative sources, other than from financial intermediaries, to obtain funds. We test these theoretical hypotheses using firm-level data from Chinese manufacturing industries and find strong evidence supporting the predictions of the model.
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Bibliographic InfoPaper provided by Institute of Economic Research, Hitotsubashi University in its series Global COE Hi-Stat Discussion Paper Series with number gd09-098.
Date of creation: Dec 2009
Date of revision:
Credit Constraints; Heterogeneous Firms; Productivity; Trade;
Find related papers by JEL classification:
- F1 - International Economics - - Trade
- F3 - International Economics - - International Finance
- D9 - Microeconomics - - Intertemporal Choice
- G2 - Financial Economics - - Financial Institutions and Services
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-01-16 (All new papers)
- NEP-EFF-2010-01-16 (Efficiency & Productivity)
- NEP-INT-2010-01-16 (International Trade)
- NEP-PPM-2010-01-16 (Project, Program & Portfolio Management)
- NEP-TRA-2010-01-16 (Transition Economics)
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