Effects of Regional Financial Development on the Resilience of Wood-Processing Enterprises

A common challenge faced by global wood-processing enterprises (WPEs) is their frequent exposure to external shocks. The improvement of regional financial development (RFD) may help WPEs enhance their resilience, thereby enabling them to mitigate external shocks. Against this backdrop, it is worth investigating whether RFD’s improvement can enhance WPEs’ resilience. However, the literature that addresses this issue is scarce. Based on the data of WPEs in mainland China from 2008 to 2016, we evaluate RFD’s effect on WPEs’ resilience. The findings are as follows: RFD can positively affect WPEs’ resilience, and multi-dimensional stability tests confirm the robustness of this result. RFD produces indirect positive effects by enhancing WPEs’ financing capacity and reducing their financing costs. Heterogeneity tests reveal that the RFD’s positive effect manifests in three distinct wood-processing sub-sectors. Crucially, its impact proves significantly greater on small and micro WPEs than on medium and large-sized ones. Furthermore, the positive effects are stronger for WPEs located in central and western provinces and non-municipal districts versus those situated in eastern provinces and municipal districts. Compared with technology- and capital-intensive WPEs, labor-intensive ones benefit more from RFD’s improvement.