Effect and Mechanism of Trade Credit on Firms' Export

This paper studies the effect and mechanism of trade credit on firms' export and explains the export growth miracle of Chinese firms under the bank credit constraint from the viewpoint of trade credit. Firstly, by introducing trade credit into heterogeneous firms' export model, this paper proves that trade credit promotes export either directly or indirectly under bank credit constraint.One promotion mechanism is to ease financing constraint on the export variable cost. Another promotion mechanism is to promote the bank credit and then reduce export cost. Then, using the panel data of Chinese manufacturing firms and applying Heckman selection model, this paper makes an empirical analysis from angles of export probability and export strength. The empirical results verify the above theoretical analysis and find that the positive effects of trade credit on export are more obvious in highly competitive industries than in low competitive industries and in private firms than in other firms, but the effects are not significant in the state-owned firms and collectively-owned firms.