**Table 3. Bank Soft Budget Constraints: Bank Independence, Supervision, and Monitoring**

||Fi|nStruct = Bank<br>|Credit /(Bank<br>|Credit + Stoc|k)<br>|F|inStruct = Fore<br>|ign Bank / Tot<br>|al Bank Asset|s<br>|
|---|---|---|---|---|---|---|---|---|---|---|
|||Log of Export|||Exporter||Log of Export|||Exporter|
||Log of # of<br>Exporters|Value per<br>Exporter|Exporter<br>EntryRate|Exporter<br>Exit Rate|Turnover<br>Rate|Log of # of<br>Exporters|Value per<br>Exporter|Exporter<br>EntryRate|Exporter<br>Exit Rate|Turnover<br>Rate|
||(1)|(2)|(3)|(4)|(5)|(6)|(7)|(8)|(9)|(10)|
||||_Panel A_|_: Bank Susce_|_ptibility to Rela_|_ted Parties Pre_|_ssure (All Coun_|_tries)_|||
|1. FinStruct*ExtFin|-0.233|-10.145***|0.041|0.384|0.962**|0.789***|0.868|-0.316|-0.400|-1.558***|
||(0.681)|(1.350)|(0.256)|(0.248)|(0.406)|(0.288)|(0.879)|(0.325)|(0.355)|(0.463)|
|2. FinStruct*ExtFin*Bank Regul.|0.879|9.666***|-0.080|-0.440*|-1.037**|-0.993***|-1.088|0.356|0.456|1.662***|
||(0.677)|(1.391)|(0.256)|(0.249)|(0.407)|(0.316)|(0.910)|(0.325)|(0.356)|(0.465)|
|Observations|15,442|15,239|13,552|13,524|13,461|14,886|14,613|13,452|13,451|13,347|
|R-squared|0.886|0.547|0.551|0.525|0.570|0.880|0.549|0.507|0.499|0.539|
||||_Panel_|_B: Stringency_|_of Bank Audit_|_ing and Supervi_|_sion (All Count_|_ries)_|||
|3. FinStruct*ExtFin|0.268|-0.805|-0.363***|-0.301|-0.634**|0.106|-0.377|-0.246***|-0.190*|-0.414**|
||(0.441)|(1.457)|(0.104)|(0.185)|(0.291)|(0.256)|(0.606)|(0.067)|(0.101)|(0.162)|
|4. FinStruct*ExtFin*Bank Regul.|0.242|0.559|0.329***|0.246|0.576**|-0.204|0.435|0.268***|0.221**|0.477***|
||(0.453)|(1.484)|(0.105)|(0.186)|(0.292)|(0.287)|(0.638)|(0.069)|(0.102)|(0.165)|
|Observations|15,662|15,459|13,717|13,689|13,626|15,106|14,833|13,617|13,616|13,512|
|R-squared|0.890|0.555|0.558|0.536|0.579|0.886|0.558|0.515|0.510|0.548|
|||_Pa_|_nel C: Stringen_|_cy of Bank Dir_|_ectors Sanctio_|_ning if Misleadi_|_ng Informatio_|_n (All Countries_|_)_||
|5. FinStruct*ExtFin|-0.533|4.725*|-0.613***|-0.313|-0.791**|9.242|-25.160|1.387|-9.550|-8.083|
||(0.549)|(2.586)|(0.180)|(0.222)|(0.346)|(16.344)|(49.844)|(3.485)|(7.371)|(10.748)|
|6. FinStruct*ExtFin*Bank Regul.|1.134**|-5.196**|0.573***|0.255|0.725**|-9.131|24.849|-1.361|9.585|8.152|
||(0.563)|(2.602)|(0.182)|(0.222)|(0.346)|(16.340)|(49.841)|(3.484)|(7.369)|(10.744)|
|Observations|14,839|14,636|13,002|12,975|12,913|14,401|14,137|13,020|13,019|12,919|
|R-squared|0.892|0.560|0.564|0.542|0.585|0.886|0.562|0.520|0.513|0.552|
|||_P_|_anel D: Stringe_|_ncy of Bank A_|_uditing and Su_|_pervision (Exclu_|_ding High-Inc_|_ome Countries)_|||
|7. FinStruct*ExtFin|-0.818**|1.605|-0.496***|-0.599***|-1.134***|-0.468|0.709|-0.329***|-0.310**|-0.627***|
||(0.391)|(1.573)|(0.139)|(0.187)|(0.263)|(0.285)|(0.697)|(0.101)|(0.142)|(0.222)|
|8. FinStruct*ExtFin*Bank Regul.|1.485***|-1.881|0.433***|0.503***|1.025***|0.371|-0.708|0.354***|0.346**|0.697***|
||(0.409)|(1.628)|(0.140)|(0.189)|(0.265)|(0.315)|(0.734)|(0.102)|(0.144)|(0.224)|
|Observations|12,582|12,403|10,969|10,938|10,877|13,293|13,035|11,968|11,967|11,863|
|R-squared|0.869|0.534|0.528|0.498|0.543|0.861|0.533|0.484|0.473|0.514|

Note: This table reports the effects of financial structures on the number, size and dynamics of exporters in 2-digit ISIC industries depending on the degree of independence of banks, the quality of auditing and supervision of banks, and the stringency of sanctioning of bank managers. The financial structure is captured by the ratio of bank credit to the sum of stock market capitalization and bank credit (columns 1-5) or the share of foreign bank assets in total bank assets in the country (columns 6-10). The dependent variables are the number of exporters; the average foreign sales of exporters; the entry rate of exporters; the exit rate of exporters; the turnover (entry+exit) rate of exporters. In panel A, Bank Regul. is a dummy variable equal to 1 if in the country related parties can own capital in a bank. In panel B, Bank Regul. is a dummy variable equal to 1 if in the country auditors are required to communicate audits directly to the supervisory agency. In panels C and D, Bank Regul. is a dummy variable equal to 1 if in the country bank directors are legally liable if information disclosed is misleading. All regressions include Bank Regul.*ExtFin, FinDev*ExtFin, FinDev*ExtFin*Bank Regul., country-year fixed effects and industry-year fixed effects, where FinDev is measured as all credit over GDP to control for total financial development. Regressions in columns 6-10 also include Bank Concentration*ExtFin and Bank Concentration*ExtFin*Bank Regul. to control for the concentration of the banking sector. Robust standard errors, clustered at the country-year level, are in parentheses. ***, **, and * denote statistical significance at the 1%, 5%, and 10% level, respectively.