Will Local Financial Development Affect the Competitive Advantage of Chinese Enterprises' Exports?

Abstract

Many studies confirm the impact of financial development on the macro economy, but systematic studies of the impact of financial development on corporate exports is still lacking. Based on the quasi-natural experiment established by city commercial banks, this paper uses micro-data of Chinese industrial enterprises from 1998 to 2013 and adopts a double difference method to test the impact of the development of local financial institutions on corporate exports. The results show that the establishment of city commercial banks has significantly increased the export participation rate and total export volume of manufacturing enterprises in the city where they are located; comparatively speaking, its impact on the export expansion margin of industrial enterprises exceeds the intensive margin. At the same time, the study also found that the above-mentioned influences exist in both long-term and short-term, and in enterprises of different sizes and attributes. These findings provide new evidence for understanding the relationship between local financial development and corporate exports.