Summary:
Since China's accession to the WTO in 2001, its foreign trade has developed rapidly and total imports have greatly increased. Firms that wish to further expand their scale of imports or import new products from different countries need more funds to pay the fixed and variable import costs. Therefore, financial constraints are an important factor affecting firm import behavior. The greater the financial constraints on firms, the more difficult it is for them to obtain funds through internal cash flow, bank loans, and other means, which may have a significant negative effect on their import behavior. Against this background, it is highly relevant to investigate the impact of financial constraints on firm import behavior. Previous research has studied the impact of financial constraints on export growth at the firm level using both theoretical and empirical methods. While import firms and export firms have many similarities, such as large scale, high productivity, and similar trade patterns at both product and national levels, the determinants of imports are more complicated and quite different from those of exports. Generally speaking, the effect of financial constraints on firm imports has scarcely been studied and demands urgent attention. Based on the methods of Muûls (2014) and Bernard et al. (2009), this study divides firm import value into four parts: the number of markets imported from, the number of products imported, the density of imports, and the average value of imports. The number of markets imported from and the number of products imported indicate the extensive margin, and the average value of imports indicates the intensive margin. Following the literature, we measure the financial constraints firms face by defining a new comprehensive indicator Score A and Score B based on seven financial indicators: the operating cash flow as the total assets ratio, accounts receivable turnover rate, interest coverage ratio, current ratio, liquidation ratio, tangible assets ratio, and total return on assets. We then combine product-level data from Chinese customs trade data and comprehensive firm-level data of Chinese industrial firms to empirically analyze the impact of financial constraints on firm import behavior. We also analyze the different effects of financial constraints on the import behavior of different firms from five angles, including ownership pattern, import mode, export status, industry type, and province and city level. Finally, we compare the differences in the impact of financial constraints on imports of firms with and without a financial crisis. The main contributions of this study are as follows. (1) We focus on firm import rather than export behavior and analyze the impact of financial constraints. (2) We expand the margins of trade from the two or three used in prior studies to four margins. (3) Instead of a single index, we build a comprehensive index to measure firm financial constraints based on both internal financial liquidity and external credit characteristics. (4) We analyze the different effects of financial constraints on firm import behavior from multiple perspectives. Our study draws the following conclusions. (1) Financial constraints have no significant impact on the intensive margin, but negatively affect the extensive margin and the decision to import, indicating that it is difficult for firms to bear the fixed cost of expanding new markets or importing new products. (2) The impact of financial constraint on imports is greater for domestic firms, processing trades, and firms that both import and export compared to foreign firms, general trades, and firms that only import. (3) Different external financial environments lead to significant differences in the impact of financial constraints on firm import behavior such that the financial crisis increased the sensitivity of firm import behavior to financial constraints.
魏浩, 白明浩, 郭也. 融资约束与中国企业的进口行为[J]. 金融研究, 2019, 464(2): 98-116.
WEI Hao, BAI Minghao, GUO Ye. Financial Constraints and Import Behavior of Chinese Firms. Journal of Financial Research, 2019, 464(2): 98-116.
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