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Generalized Method of Moments (GMM) Model for Financing Decision and Capital Structure on Manufacturing Enterprises’ Export Capacity

Guohua He, Deng Shang, Minwen Ye


To improve the export capacity of Chinese enterprises is the key to enhance the international competitiveness and promote economic status of China. This article employs an expanded Generalized Method of Moments (GMM) model considering financing decision and capital structure, in which we distinguish enterprises into three sizes namely large-scale ones, medium-sized ones and small ones. We select 1901 manufacturing enterprises which are capable to export in China as sample and select data during 1999—2007 to conduct empirical analysis. The result turns out that: (1) As for financing decision, increasing the leverage will improve an enterprise’s competitiveness of export, especially for small businesses. (2) As for capital structure, small and medium-sized enterprises (SMEs) depend mainly on collective capital, personal capital and FDI to improve their export competitiveness. As a result, it’s necessary for SMEs to enhance financing support and reduce financing cost, while for large scale enterprises, technological innovation should be motivated.


manufacturing enterprises, financing decision, capital structure, export capacity.

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