Abstract
This thesis investigates the effect of credit constraints on firm behavior in the export and domestic markets. Using a panel of China's manufacturing firms over the period of 1998-2007, the results suggest that a decrease in credit constraints increases the both the probability of exporting and volume of exports. However, when we study simultaneously export and domestic market behavior, we find evidence of internal financing--that firms allocate funds between markets. Furthermore, when considering the interaction effects between credit constraints and productivity, we find that productivity becomes a significant determinant of exporting decision. These results imply that to expand internationally through exporting, firms should improve productivity level and seek extra external financing channels.