How does business credit environment affect exports performance of small and medium-sized enterprises: Evidence in China

This paper uses matched data from the CSMAR database and the China City Statistical Yearbook through a fixed effects model to examine the impact of business credit environment on small and medium-sized enterprises (SMEs) exports at the city level in China. Considering the possible endogenous problems, this paper chooses the number of scholars in Ming and Qing dynasties as the instrumental variable of urban commercial credit environment. The empirical results show that: Firstly, the improvement of urban business credit environment has a significant contribution to the export growth of enterprises; Secondly, the mechanism of the role of urban business credit environment on SMEs exports is mainly expressed through promoting R&D investment and enhancing market dynamics; Thirdly, the business credit environment is more obvious to state-owned enterprises, eastern regions and cities with less trade freedom. With the development of urban business credit environment, individuals or companies join the competition in the industry through new start-ups to stimulate corporate exports, and existing SMEs promote corporate exports through local preferential policies, increased investment in R&D, and optimized innovation policies as well as resource allocation.