Abstract:   Abstract: A dynamic panel data mode is established according to the financial data of 522 China’s manufacturing listed companies from 2001 to 2007, the applicability of the company’s balance-sheet model for financial crisis proposed by Krugman(1999) to China is analyzed. It turns out that under the condition of currency mismatch, the fluctuation of RMB exchange rate has significant effect on the company’s short-term credit ability but little effect on the long-run credit ability. Moreover, the effect is dynamic, and the effect caused by fluctuation of RMB exchange rate of the lag of one-year on company’s credit ability is more obvious than the effect of the same year. Thus the company’s balance-sheet model for financial crisis is applicable to China.

Key words: financial crisis, currency mismatch, balance-sheet effcet, dynamic panel data, GMM estimation