How Does Bank Competition Affect Trade-Mode Transformation? Evidence from Chinese Export Enterprises

This study investigates the effect of banking competition on the transformation of Chinese firms' export trade mode. Using about 300 thousand observations, we find that bank competition affects a company's transition from processing mode to ordinary trade. The validity of our findings is confirmed through several robustness tests. Additionally, we investigate the underlying processes through which bank competition influences trade-mode transformation via the channels of firms' financial constraints, the regional marketization process and banking structural characteristics. Finally, we explore the heterogeneity conditions and find that geographical locations and firms with distinct ownership structures exhibit diverse performances in the aforementioned connection