Fiscal institutional reform and export product quality: A Quasi-experimental research on counties managed directly by provinces

Abstract

The fiscal system plays a significant role in an enterprise's financial resources and innovation. The existing literature on the impact of fiscal restructuring on exports deals mainly with the quantitative level of exports and does not answer quality-oriented policy concerns. This paper considers counties-managed-directly-by-provinces reform as a quasi-experiment, using the double-difference method to examine the impact of that reform on the export product quality of enterprises. The results show that after the reform, the quality of export products was significantly improved for the treatment group compared with the control group. Placebo, sample tail-shortening, two-stage difference-in-differences (DID), and propensity score matching–DID retesting confirmed the robustness of these results. State-owned enterprises and small-scale enterprises were found to be more sensitive to reform. The reform alleviated financial repression and improved the export product quality of enterprises by influencing bank credit, government subsidies, and horizontal financing between enterprises.