Trade Credit, Ownership and Informal Financing in China
28 Pages Posted: 22 Jul 2019
Date Written: 2019
We investigate informal financing such as trade credit in China. The credit for both state-owned enterprises (SOEs) and non-SOEs dramatically increased over time. Our results suggest that non-SOEs rely more on trade credit financing, but this effect is mitigated by supplier’s liquidity position. Further results show that during financial crisis, non-SOEs reduce their account receivables due to high financing costs. Our research highlights the importance of informal financing and ownership structure in emerging markets.
Keywords: Informal financing, non-SOEs, China, Accounts receivable, Accounts payable,Financial crisis
JEL Classification: G01, G30, G32
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