This paper is an empirical investigation of the effect of RMB volatility on China’s export with a special emphasis on the impacts of the reform of the RMB exchange rate regime implemented on July 21, 2005. We estimated two types of volatility measures (one based on the ARCH model and the other the usual standard deviation) utilizing monthly real effective exchange rate data from January 2002 through December 2011 and examined both short-run and long-run effects of this volatility on each specific export sector with an ARDL approach. The results indicate that China’s exports are not affected by the RMB exchange rate volatility. On the other hand, the level of the exchange rate has a significant impact on Chinese exports (especially on industrial products export) during the reform period.

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Relying on our field survey in Southern Jiangsu Province, this work tries to clarify the mechanism that trade credit develops and works as a sound financial intermediation path there. Our main findings are as follows. First, competitive market environment motivates firms to offer trade credit for promoting their sales in China, which can develop trade credit. Second, investment by both sellers and buyers in a relation with their business partners prevents credit transaction from resulting in default or arrears. In particular, Chinese firms tend to save the time to build reliable business relationship by spending monetary costs. Third, not only informal institutions such as information network within firms but also formal institutions such as legal system help trade credit finance function well.

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This study investigates the competitive position of Japanese megabanks in China. Japanese banks have taken an offensive position and started expanding to overseas, especially in China, after the repayment of public funds. Such a development is of great business and academic interest. As lending behavior is one of the measures of success or failure of overseas expansion, this study tries to assess how Japanese banks compete in a syndicated loan market. The study divides loan transactions into two groups on the basis of participation of Japanese banks, and compares the lending terms as well as borrowers’ characteristics to elucidate the features of loan transactions performed by Japanese banks. Furthermore, a probit model that can control several explanatory variables simultaneously is used to detect the lending behaviors of Japanese banks. The main results of this analysis are as follows. First, the most distinctive feature of Japanese loan transactions is that Japanese banks lend to Japanese as well as foreign companies. In these transactions, only few borrowers are state enterprises, local government projects, and companies with a listed parent company. Though, in common assumption, this set of borrowers should encourage Japanese banks to participate in loan transactions, the analysis showed an opposite result. Second, the loans given by Japanese banks are mainly used for working capital and refinancing. A comparison of loan maturities revealed that Japanese banks preferred to provide short-term loans. These features of Japanese banks’ lending behavior can be explained by follow-the-client hypothesis used in the research studies of multinational banks. The lending behavior of Japanese banks is rational because loans to Japanese companies result in a lower marginal cost of information due to availability of credit information accumulated in domestic loan transactions, more intense long-term relationships, and contributions to deeper domestic transactions.

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