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Cluster-based Trade Credit and Firm Export:An Explanation for China’s Export Miracle
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TitleCluster-based Trade Credit and Firm Export:An Explanation for China’s Export Miracle  
AuthorMa Shuzhong and Zhang Hongsheng  
OrganizationZheJiang University; 
Key WordsTrade Credit; Cluster; Firm Export; DID; Export Decision 
AbstractChina achieved a huge export growth despite an underdeveloped capital market. This paper tries to provide an explanation for this puzzle from the cluster-based trade credit point of view. We find that total trade credit within a cluster can promote significantly the export value of firms in the cluster by affecting private firms’ export mainly with smaller or insignificant effects on state-owned enterprises (SOE) and foreign invested enterprises (FIE). Besides, cluster-based trade credits mainly affect export of firms in the eastern area. A series of robustness checks all support the above results. We further incorporate agglomeration factor of clusters to control omitted variables problems. To address the identification issue arising from potential endogeneity of cluster trade credit, we construct a quasi-experiment by using changes in firm location and estimate the regression utilizing DID method. The results remain robust qualitatively. This paper further analyzes the dynamic effect of cluster-based trade credit on firm export and find that cluster-based trade credit help improve the probability for non-exporters to be exporters. Placebo tests show that cluster-based trade credit has no effect on processing exports. The results in this paper not only stress the importance of cluster-based trade credit for firm export, but also emphasize its critical effect on the entry decision of exporting firms which can explain the fact that private firms in China have achieved a rapid growth despite having almost no access to formal financing compared to SOEs and FIEs since China’s market-oriented reform.  
Serial NumberWP1143 
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