Research On The Impact Of Borrower-lender Distance On Firms' Imports And Exports

Since China's reform and opening up,China has actively participated in the global industrial division by virtue of the comparative advantage of labor force,and its export trade has developed rapidly,which has injected an important driving force into China's economic growth.So far during the 21 st century,with the rising domestic labor co sts and the further deepening of the international production network,China's export structure has shown a long-term trend of transformation from processing trade to ordinary trade.At the same time,in the context of frequent international trade friction s and rising domestic factor costs,the focus of China's foreign trade policy has begun to shift from emphasizing export trade in the past to actively expanding imports.I n China's current package of "import promotion" policies,guiding enterprises to impo rt advanced machinery and equipment is one of its important directions.Due to the existence of trade costs,the sustainable development of both export trade and import trade cannot be separated from the effective support of external funds,and an important source of external financing is the credit of commercial banks.After years of reform and development,the spatial distribution system of banking financial institutions across the country has been increasingly improved,and the geographical dista nce between banking institutions and enterprises(also called “borrower-lender distance”)has also changed significantly.However,the existing studies on the impact of financial development on international trade mainly focus on the impact of the depth of financial development,lack of investigation from the perspective of the geographical structure of financial supply.In view of this,this paper attempts to combine financial geography with heterogeneous-firm trade theory,and systematically studies the e ffect of borrowerlender distance on firms' trade behavior and its internal mechanism from the perspective of export behavior,export trade transformation and upgrading and machinery imports.This paper mainly focuses on the following questions: how to measure the borrower-lender distance in China? What is the impact of borrower-lender distance on firms' exports,the transformation and upgrading of export trade and firms' machinery imports? Through what mechanism does borrower-lender distance affect firms' imports and exports? Is there heterogeneity in the impact of borrower-lender distance on firms' imports and exports? Answering the above questions is of great significance for deepening the understanding of the relationship between financial development and international trade and promoting the structural reform of the financial supply side.Firstly,using the matched Chinese industrial enterprises database and data on the financial institution licenses obtained from the China Banking Regulatory Commission(CBRC)from 2000 to 2010,this paper determines the precise address information for Chinese industrial enterprises and banking branches.Then this paper directly calculates the coordinate distances between enterprises and banking branches using the open platform of AMAP.On this basis,this paper empirically studies the impact of borrower–lender distance on firms' export behavior and the underlying mechanism.The results show that the shortening of borrower-lender distance significantly increases the probability and sales of firms' export.Heterogeneity tests show that the positive effects of shortening the geographical distance between firms and joint-stock commercial banks are the strongest,followed by city commercial banks and rural commercial banks,and state-owned commercial banks are the weakest.For private firms and firms in central and western regions,the shortening of borrower-lender distance tends to greatly promote firms' export.Improving credit availability is an important mechanism by which the shortening of borrower-lender distance promotes firms' export.Secondly,based on the practical background of the transformation of China's export trade structure from processing trade to general trade,this paper further examines the impact of borrower-lender distance on the transformation and upgrading of export trade.The results show that the shortening of borrower-lender distance significantly promotes the transformation and upgrading of export trade,as characterized by the share of ordinary trade.Reduced financing costs and decreased default probabilities are the main channels by which the shortening of borrower-lender distance promotes the transformation and upgrading of export trade.These positive effects of shortening borrower-lender distance,however,are heterogeneous.For small and medium-sized banks,and for areas with imperfect institutional environments,backward financial systems,and underdeveloped transportation infrastructure,the shortening of borrower-lender distance tends to greatly increase the share of ordinary trade exports by local enterprises.A multi-dimensional analysis of the transformation and upgrading of export trade finds that shortening borrower-lender distance also significantly improves the quality of export pro ducts,the technological sophistication of exports,the status of local firms in the global value chain,and the capacity of these firms for innovation.Finally,based on the background that guiding enterprises to import advanced machinery and equipment has become an important part of China's current active import strategy,this paper defines the industrial special productive imported machinery at the HS6-digit level,and examines the effect of borrower-lender distance on firms' machinery imports and its economic consequences.The results show that the shortening of borrower-lender distance significantly increases the scale of firms' machinery imports,and this positive effect of shortening borrower-lender distance is especially stronger for private firms,export firms and general trade firms.the relaxation of financing constraints and the strengthening of peer information are important channels by which the shortening of borrower-lender distance promotes firms' machinery imports.Furthermore,the shortening of borrower-lender distance also significantly increases the probability,variety and quality of firms' machinery imports.Based on the analysis of the economic consequences of borrower-lender distance and machinery imports,it is found that the shortening of borrower-lender distance significantly improves the capacity of firms for innovation,firms' exports and the quality of export products by promoting machinery imports.The scale expansion and quality improvement of imported machinery are the important reasons for the shorting of borrower-lender distance to improve firm performance.The policy implications of this paper are as follows: first,on the premise of controllable risks and sustainable commercial development,the government shoul d persist in relaxing the market access conditions of commercial bank branches,and increase and improve the effective supply of local credit funds.Second,the government should encourage the development of small and medium-sized banks and accelerate the construction of a multi-level and differentiated banking competition system.Third,commercial banks should strengthen information construction,reduce communication costs and strengthen risk management capabilities.Fourth,policy makers should consider the differences and pertinence of regional and enterprise subjects when formulating financial policies.