China’s financial reform and high-quality export development: A dual-margin perspective

This study explores how China’s distinctive financial reforms shape firm-level export dynamics along the extensive and intensive margins. Using integrated firm-bank matched datasets and instrumental variables based on Postal Savings Bank of China reforms, we find that optimizing banking sector structure significantly promotes firms’ exports along the extensive margin, while restraining growth along the intensive margin. These effects are driven by alleviating financing constraints and boosting innovation, particularly for small and medium enterprises. The results highlight the critical role of joint-stock and city commercial banks in driving export upgrading. This research offers policy insights for developing countries on coordinating financial reforms with export growth.