(Central China Development Research Institute, Wuhan University， Wuhan Hubei 430072)
Abstract：This paper proposes the theoretical hypothesis that in different institutional environments, financial development will play a different role on export upgrading. Based on the panel data of the Chinese provinces from 2004 to 2015, the paper uses threshold model to investigate the impact of financial development, including financial scale, financial efficiency and financial structure, on the level of export at different institutional quality levels. The result shows that, when the differences in regional institutional quality are controlled, financial development can significantly promote the regional export upgrading.
Considering the heterogeneity of regional institutional quality, threshold effect test results show that with different institutional environments, the impact of financial development on the levels of export exhibits significant differences, and the promotional effect of financial development on the level of export will be significantly enhanced with the improvements made in the quality of the institution. In addition, financial efficiency plays the most significant role in promoting regional export upgrading. Therefore, when the quality of the regional institutional quality gets improved, the financial development will substantially facilitate regional export upgrading.
Key Words: institutional quality; financial development; export sophistication; threshold model；system GMM model