Banking Sector Profits and Export Margins of Wood Forest Products: Evidence from China’s Provincial Data

The export expansion of wood forest products (WFPs) generates substantial socio-economic benefits. Unfortunately, the WFP manufacturing industry frequently experiences challenges in accessing finance and high financing costs. Since profit scramble between financial sector and real economy sectors has become a critical global concern, it is worth investigating how banking sector profits (BSPs) impact WFPs’ export margins, and whether a “financial concession” policy can mitigate or amplify this effect. Drawing on over four million trade records from China’s Customs Database and the United Nations Trade and Business Database, this study quantifies the WFPs’ export margins of 31 provinces in Mainland China to 184 countries during 2007–2022. Then it assesses the effects of regional BSP on the WFPs’ export margins. The results indicate that the extensive, intensive, and quantity margins of WFPs’ export exhibit an overall upward trend with fluctuations, while the price margin has shown steady growth since 2016. Regional BSP has significant negative effects on the extensive, intensive, and quantity margins. The observed upward trend of WFPs’ export margins implies that low BSP may facilitate export growth of WFPs. Further heterogeneity analysis indicates that the BSPs’ negative impact is more pronounced for labor-intensive WFPs’ exports. China’s “financial concession” policy effectively mitigates the BSPs’ adverse effects. Moderation effect analysis demonstrates that a larger number of bank institution outlets, a higher share of rural bank institution outlets, and the development of digital finance significantly reduce the BSPs’ negative effects.