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Financial constraints, exchange rate changes and export price: Evidence from Chinese exporters

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  • Chen, Ting
  • Luo, Wenjie
  • Xiang, Xunyong

Abstract

Focusing on firm heterogeneity and introducing financial constraints into the model of Berman et al. (2012), this paper analyses how financial constraints affect the exchange rate pass-through of exporters. Theoretically, the model shows that financially constrained firms have a higher exchange rate pass-through. Empirically, we use the Annual Survey of Industrial Firms and Chinese Customs Trade Statistics from 2000 to 2009 to examine the impact of financial constraints on the exchange rate pass-through at the micro level, and the results are consistent with theoretical expectations. This paper provides a micro-level explanation for the “lack of response of exports to exchange rate movements” phenomenon.

Suggested Citation

  • Chen, Ting & Luo, Wenjie & Xiang, Xunyong, 2022. "Financial constraints, exchange rate changes and export price: Evidence from Chinese exporters," Finance Research Letters, Elsevier, vol. 48(C).
    • Handle: RePEc:eee:finlet:v:48:y:2022:i:c:s1544612322001246
    DOI: 10.1016/j.frl.2022.102823
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    References listed on IDEAS

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    Cited by:

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    2. Zhang, Qi-nan & Zhang, Fan-fan & Mai, Qiang, 2023. "Robot adoption and labor demand: A new interpretation from external competition," Technology in Society, Elsevier, vol. 74(C).
    3. Luo, Tao & Zhang, Lixia & Sun, Huaping & Bai, Jiancheng, 2023. "Enhancing exchange rate volatility prediction accuracy: Assessing the influence of different indices on the USD/CNY exchange rate," Finance Research Letters, Elsevier, vol. 58(PB).
    4. Chen, Ming & Chen, Chen, 2023. "Financial constraints alleviation: Why does state-owned share reduction in China promote firm performance?," Finance Research Letters, Elsevier, vol. 55(PA).

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