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Credit Distribution and Exports: Microeconomic Evidence from China

Yao Li (), Albert Park () and Chen Zhao ()
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Chen Zhao: Department of Economics, Hong Kong University of Science and Technology

No 2015-31, HKUST IEMS Working Paper Series from HKUST Institute for Emerging Market Studies

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 (search for similar items in EconPapers)
JEL-codes: F14 G20 L60 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-bec, nep-cna, nep-int and nep-tra
Date: 2015-11, Revised 2015-11
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