In international trade, contract environment the two trade sides face and contract characteristics of trade products are the important factors affecting the trade relationship. According to heterogeneity trade theory, this paper explores how contract factors play a role in the duration of trade through their effects on risks from perspectives of internal and external causes, namely products industry features and regional contract environment respectively. And then based on Chinese Customs Statistics, the World Business Environment Survey of the World Bank and China Industry Business Performance Data at HS8 quantile level, it makes a COX proportional hazards analysis from an enterprise-product-destination perspective. It comes to the following conclusions:firstly, geographic contract feature has a significant effect on the duration of trade, and contract environment advantage plays a significant promotion role in the duration of trade; secondly, the effect of geographic contract feature on the duration of trade varies with heterogeneous contract features of trade products, and sound regional contract environment can reduce default risks in terms of larger margin effect and play a better role in the trade of products with high contract dependence; thirdly, trade relationship in China experiences quantity increase but a rise in exit rate year by year. This paper studies trade stability from a perspective of the duration of trade, and is of great significance to the improvement of trade quality in the future in China.
Bilateral Business Environment, Contract Dependence and Duration of Trade: Evidence from Firm-level Data in China
Journal of Finance and Economics Vol. 42, Issue 04, pp. 49 - 60 (2016) DOI:10.16538/j.cnki.jfe.2016.04.005
Cite this article
Zhang Yan, Sun Puyang. Bilateral Business Environment, Contract Dependence and Duration of Trade: Evidence from Firm-level Data in China[J]. Journal of Finance and Economics, 2016, 42(4): 49–60.
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