Capital market liberalization and firm export performance: evidence from China's Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect programmes

Using a quasi-natural experiment method, this study examines the effects of the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect (SHKS) programmes on Chinese listed firms' export performance. We find that the SHKS positively correlates with firms' export performance, enhances export capacity, and affects export binary margins. The SHKS influences export capacity and binary margins by improving production efficiency, promoting R&D, and easing financing constraints. Finally, the positive effects of the SHKS are particularly pronounced for state-owned enterprises (SOEs), manufacturing firms, and highly financialised firms. These findings contribute to a deeper understanding of the impact of China's ongoing capital market liberalization on listed firms' export performance, providing valuable insights for policymakers.