Trade Credit, Ownership and Informal Financing in China

28 Pages Posted: 22 Jul 2019

See all articles by Xiaoming Wang

Xiaoming Wang

Shanghai University of Finance and Economics

Weijun Wu

Jiangxi University of Finance and Economics - School of Finance and Research Center of Sci&Tech Finance

Chen Yin

Fudan University - School of Economics

Sili Zhou

Fudan University - Fanhai International School of Finance (FISF)

Date Written: 2019

Abstract

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

Suggested Citation

Wang, Xiaoming and Wu, Weijun and Yin, Chen and Zhou, Sili, Trade Credit, Ownership and Informal Financing in China (2019). Pacific-Basin Finance Journal, Vol. 57, 2019, Available at SSRN: https://ssrn.com/abstract=3422780

Xiaoming Wang

Shanghai University of Finance and Economics ( email )

777 Guoding Road
Shanghai, AK Shanghai 200433
China

Weijun Wu

Jiangxi University of Finance and Economics - School of Finance and Research Center of Sci&Tech Finance ( email )

No.169 East Shuanggang Road
Nanchang, Jiangxi, 330013
China

Chen Yin

Fudan University - School of Economics ( email )

600 GuoQuan Road
Shanghai, 200433
China

Sili Zhou (Contact Author)

Fudan University - Fanhai International School of Finance (FISF) ( email )

220 Handan Road
Shanghai, 200433
China

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