Economics at Xiamen University

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How Local Financial Market Conditions, Interest Rates, and Productivity Relate to Decisions to Export
Dingming Liu, Pu Chen, Chunyang Wang
Annals of Economics and Finance 16-2, 315{334 (2015)
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Theoretic and empirical studies argue that the di erences in nancial mar- ket development contribute to varying export levels in international trade. We illustrate this idea by studying a heterogeneous rm model expanded to in- clude a borrowing constraint, and we nd that in a developed nancial system a change in interest rate exerts a signi cant e ect on exports, due to the high dependence on external nancing. Conversely, in less developed nancial sys- tems, where producers typically have to rely on internally generated capital, changes in the interest rate do not generate a signi cant e ect on export levels.
JEL-Codes: F1, F4, G3
Keywords: Exporters; Interest rate; Trade Volume


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