Work

Trade Credit and Firm Efficiency: Evidence from Chinese Manufacturing Firms

Year: 2023

Type: article

Abstract: Our work focuses on the impact of trade credit financing on firm efficiency exploiting a sample of Chinese manufacturing listed firms for the period 2004 to 2018. We find that trade credit significantly improves firm efficiency. This positive association is stronger in firms located in regions with higher levels of social trust, during periods with higher economic policy uncertainty and in times of economic downturn. We reveal three economic mechanisms underlying our baseline findings: alleviating financial constraints, mitigating agency conflicts, and reducing transaction costs.

Source: Emerging Markets Finance and Trade

DOI: 10.1080/1540496x.2023.2168477

Authors: Ying Tang, Lu Xu, Shijun Guo, Andrea Moro

Institutions: Southwestern University of Finance and Economics, Chongqing University, Cranfield University

Language: English

Topic: Working Capital and Financial Performance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: green

Funders: National Natural Science Foundation of China, China Postdoctoral Science Foundation, Fundamental Research Funds for the Central Universities