Local Financial Development and Constraints on Private-Firm Exports: Evidence from City Commercial Banks in China

Published on: 2017-03-16
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Abstract

The paper investigates whether the development of city commercial banks (CCBs) across China has alleviated the constraints from China’s domestic financial-market inefficiency on the export activity of domestic private firms. Considering the export behavior of 260 cities between 1997 and 2012, we confirm the well-established under-performance of domestic private firms in financially more vulnerable sectors compared to foreign affiliates in China.

We show that a greater number of city commercial bank branches raises domestic private-firm exports disproportionately more in financially-dependent sectors, and so reduces the systematic disadvantage of domestic private firms relative to foreign-owned firms in export markets resulting from their greater financial exclusion. We however also find that private-firm export performance has deteriorated relative to that of State-owned firms, casting doubt on the ability of CCBs to end the systematic bias of lending in favor of the State sector.

About the Speaker

Sandra Poncet is professor of Economics at the University of Paris 1. She is an associated member at the Paris School of Economics. Her research focuses on the process of economic development in a context of globalization. Her work consists mainly of empirical analyses applied to the Chinese economy. Her work has been published extensively in academic journals such as Journal of Development Economics, Review of Economics and Statistics, World Development, World Bank Economic Review.

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