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Credit Distribution and Exports: Microeconomic Evidence from China

Author

Listed:
  • Yao Amber Li

    () (Department of Economics, Hong Kong University of Science and Technology
    Institute for Emerging Market Studies, Hong Kong University of Science and Technology)

  • Albert Park

    () (Department of Economics, Hong Kong University of Science and Technology
    Institute for Emerging Market Studies, Hong Kong University of Science and Technology)

  • Chen Zhao

    () (Department of Economics, Hong Kong University of Science and Technology)

Abstract

This paper explores how the distribution of credit supply within an industry affects that industry's export intensity (the export-to-sales ratio) and export propensity (the ratio of the number of exporters to the total number of firms). Using a heterogeneous firm trade model, we derive two opposing hypotheses: for industries with relatively low (high) foreign market penetration costs, a more dispersed credit distribution decreases (increases) the industry's export intensity and the number of exporters. The empirical results using Chinese firm-level data and bank loan data support both hypotheses and confirm the significant heterogeneous impacts of credit distribution on exports across industries.

Suggested Citation

  • Yao Amber Li & Albert Park & Chen Zhao, 2015. "Credit Distribution and Exports: Microeconomic Evidence from China," HKUST IEMS Working Paper Series 2015-31, HKUST Institute for Emerging Market Studies, revised Nov 2015.
  • Handle: RePEc:hku:wpaper:201531
    as

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    File URL: http://iems.ust.hk/assets/publications/working-papers-2015/iemswp2015-31.pdf
    File Function: First version, 2015
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    References listed on IDEAS

    as
    1. Poncet, Sandra & Steingress, Walter & Vandenbussche, Hylke, 2010. "Financial constraints in China: Firm-level evidence," China Economic Review, Elsevier, vol. 21(3), pages 411-422, September.
    2. Chong-En Bai & Jiangyong Lu & Zhigang Tao, 2006. "The Multitask Theory of State Enterprise Reform: Empirical Evidence from China," American Economic Review, American Economic Association, vol. 96(2), pages 353-357, May.
    3. Li, Hongbin & Meng, Lingsheng & Wang, Qian & Zhou, Li-An, 2008. "Political connections, financing and firm performance: Evidence from Chinese private firms," Journal of Development Economics, Elsevier, vol. 87(2), pages 283-299, October.
    4. Mary Amiti & David E. Weinstein, 2011. "Exports and Financial Shocks," The Quarterly Journal of Economics, Oxford University Press, vol. 126(4), pages 1841-1877.
    5. Natarajan Balasubramanian & Jagadeesh Sivadasan, 2009. "Capital Resalability, Productivity Dispersion, and Market Structure," The Review of Economics and Statistics, MIT Press, vol. 91(3), pages 547-557, August.
    6. Joachim Jarreau & Sandra Poncet, 2010. "Export Performance and Credit Constraints in China," Working Papers 2010-33, CEPII research center.
    7. repec:cup:jfinqa:v:46:y:2011:i:06:p:1795-1830_00 is not listed on IDEAS
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    1. repec:eee:riibaf:v:45:y:2018:i:c:p:134-149 is not listed on IDEAS

    More about this item

    Keywords

    credit constraints; credit supply; financial development; credit distribution; heterogeneous firms; international trade; liquidity;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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