Credit Distribution and Exports: Microeconomic Evidence from China
46 Pages Posted: 3 Nov 2015
Date Written: November 2, 2015
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.
Keywords: credit constraints, credit supply, financial development, credit distribution, heterogeneous firms, international trade, liquidity
JEL Classification: F14, G20, L60
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