Credit Capacity And Export Quality In Manufacturing Firms

Since China’s economic reform and opening up,the country has experienced extensive economic growth,yet the improvement in the quality of economic development has been slow.The 19 th National Congress report highlighted the shift of China’s economy from a high-speed growth stage to a high-quality development stage,emphasizing the need for transformation and upgrading of Chinese export enterprises to accelerate quality competition.The 20 th National Congress report also noted that accelerating China’s development into a trading power is necessary to improve the quality,efficiency,power transformation and productivity of China’s economic development.Therefore,research on the quality of export products has garnered significant attention from the academic community.Numerous studies have shown that adequate credit resources play a vital role in upgrading enterprise product quality.On one hand,from the perspective of a firm’s internal credit ability,obtaining credit resources may enable enterprises to play a favorable role in the process of product quality upgrading.In other words,a company’s credit capacity could significantly impact the quality of its export products.On the other hand,when obtaining credit resources,export enterprises are influenced by the overall development of the financial system.A well-developed financial service system effectively reduces information asymmetry between financial institutions and enterprises,providing multiple levels of credit resource channels.Consequently,the interaction between financial development and a firm’s credit capacity may also impact product quality.This study examines the influence of credit capacity and financial development on the quality of export products,which may not only help enterprises promote high-quality development by improving credit resource allocation efficiency but also contribute to China’s financial support for manufacturing power construction in the future and enhance China’s position in the global value chain.Considering China’s financial system’s actual situation,this paper investigates financial development from two perspectives: financial openness and digital finance.Financial openness has been accelerated through numerous government policies as a key measure to build a new open economic pattern in China.Meanwhile,digital finance,driven by technologies such as big data,the Internet of Things,artificial intelligence,and cloud computing,has become a crucial aspect of China’s financial supply-side structural reform.Based on Melitz’s(2003)monopolistic competition model,this paper introduces credit capacity and product quality,establishing the functional relationship between export product quality and credit capacity through enterprise supply-demand relationships.We then construct a theoretical analysis framework of credit capacity,financial development,and export product quality.Using micro-matching data from China’s industrial enterprise database and customs database,a two-way fixed effect model investigates the impact of firms’ credit capacity on the quality of China’s manufacturing export products.The results are further tested using alternative variable methods,industry effects,and generalized matrix methods(GMM)to enhance result reliability.The findings reveal that credit capacity significantly promotes the quality upgrade of export products for Chinese manufacturing enterprises,particularly for general trade enterprises,medium and high technology manufacturing enterprises,and enterprises in eastern China.Financial openness strengthens the promoting effect of credit capacity on enterprise export product quality.Heterogeneity analysis shows that financial opening reinforces the credit capacity of the eastern region and foreign enterprises to improve export product quality,while weakening the credit capacity of the western region and private enterprises to enhance export product quality.Lastly,digital finance and credit capacity have a substitution relationship in promoting manufacturing export product quality upgrades,reflecting the depth of use and degree of digitalization.Heterogeneity analysis indicates a more substantial substitution relationship for promoting export product quality upgrades among samples of eastern region,private,and foreign enterprises.