Foreign bank entry and export quality upgrading: evidence from a quasi-natural experiment set in China

Teng Zhang, Yanlin Xing and Hua Shang ()
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Teng Zhang: Southwestern University of Finance and Economics
Yanlin Xing: Southwestern University of Finance and Economics
Hua Shang: Southwestern University of Finance and Economics

Empirical Economics, 2024, vol. 66, issue 5, No 4, 1975-2005

Abstract: Abstract This paper investigates the effect of foreign bank entry on the export quality of firms. For this purpose, we mainly use the transaction data from the Chinese Customs Database and the production data from the Annual Survey of Industrial Firms of China during the years 2000–2006. The obtained data consists of 62,483 observations gathered from 19,888 firms. The results show that foreign bank entry enhanced the export quality of firms that are more externally financially dependent. This influence is stronger for non-state-owned firms and ordinary-trade firms than for the other types of firms. We further demonstrate that foreign bank entry is mainly through promoting innovation endeavors and improving the quality of intermediate inputs yielding to enhance the export quality of firms that have more external financial requirements.

Keywords: Foreign bank entry; Export quality; External financial dependence; Innovation; Intermediate inputs (search for similar items in EconPapers)
JEL-codes: F14 G21 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s00181-023-02513-8

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