Credit Rationing and Firm Exports: Micro Evidence from SMEs in China

Dong Cheng, Yong Tan and Jian Yu

MPRA Paper from University Library of Munich, Germany

Abstract: In this study we examine the effect of credit rationing on export performance for small and medium sized firms in China. We use a detailed firm-level data provided by the Small and Medium-sized Enterprises Dynamic Survey (SMEDS) to conduct this analysis. SMEDS provides firm-specific measures of credit rationing based directly on firm-level responses to the survey rather than indirectly from firm-level financial statements. We find that, at the extensive margin, weak and strong credit rationing reduce SMEs' export probability by 22% and 36%, respectively. At the intensive margin, they decrease SMEs' export values by more than 32% and over 66%, respectively. Different from existing literature, we construct valid firm-level instruments, firm-level housing investments and receivables, for credit rationing rather than using province-level instruments. In addition, credit rationing exhibits heterogeneous impacts on firms with different liquidity ratios, product portfolios, external collateral and capital utilization rates.

Keywords: SMEs; Strong Credit Rationing; Weak Credit Rationing; Export Performance (search for similar items in EconPapers)
JEL-codes: F10 G20 (search for similar items in EconPapers)
Date: 2017-10-12
New Economics Papers: this item is included in nep-bec, nep-cna, nep-ent, nep-sbm and nep-tra
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https://mpra.ub.uni-muenchen.de/96946/9/MPRA_paper_96946.pdf revised version (application/pdf)

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