The Regional Differences Of Financial Development Impact On Export Trade In China

In the background of economic globalization and with the free flow of capitaland transnational transaction of production commodity, the relationship betweenfinancial development and international trade has become increasingly close. Therelevant domestic and foreign literatures indicate that financial development has animportant influence on the export trade, but previous studies are mostly based on thenational level, seldom including the regional differences of the financial developmentimpact on the export trade. Based on the extremely imbalance of China’s regionaleconomic development, this article selects the provincial panel data to study disparityeffects of export trade by the financial development in China.Firstly，we review and summarize the relevant domestic and foreign literatures,and briefly describe financial development theory and export trade theory. Then weexpound mechanisms and ways of the financial development’s influence on theexport trade from different angles, from the three levels of the financial function,endogenous growth and dynamic comparative advantage, financial development canpromote a country’s enlargement of trade scale and upgrade of trade structure.Through comparative analysis and Theil index calculation, we discover that thereare significant regional differences of financial development and export trade inChina’s east, middle and west region. Generally speaking, the district differences inthe three regional presents the tendency of expansion. The financial developmentand export trade of the eastern region are significantly higher than the middle andwestern region.On the basis of theoretical analysis and existing condition description, we usevariable unit root test, least squares estimation and system GMM estimation methodto inspect China’s disparity effects of export trade by the financial development. Theempirical results show that China’s financial development has a significant impact onthe export trade, and there are significant regional differences. Among the financialdevelopment indicators, the role of financial scale on export trade is strong, financialefficiency’role on export trade is weak and the stock market does not affect the exporttrade significantly. In general, with the well-developed financial system in easternregion, financial development shows a significant role in promoting export trade. Asthe financial system is imperfect in western region, the financial development has a inhibition effect on export trade. Because of the weak external financing dependenceof economic development in the central region, the impact of the financialdevelopment on the export trade is not significant. Finally, the author summarize theresearch conclusions and put forward policy suggestions to promote the coordinateddevelopment of China’s export trade by raising financial development level.