Trade credit and firm efficiency: evidence from Chinese manufacturing firms
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Tang, Ying
Xu, Lu
Guo, Shijun
Moro, Andrea
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1540-496X
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Tang Y, Xu L, Guo S, Moro A. (2023) Trade credit and firm efficiency: evidence from Chinese manufacturing firms, Emerging Markets Finance and Trade , Volume 59, Issue 7, 2023, pp. 2204-2216
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.
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Github
Keywords
Trade credit, firm efficiency, data envelopment analysis, China
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Attribution-NonCommercial 4.0 International
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This work was supported by the National Natural Science Foundation of China (Grant No. 71703127, No. 71872022 and No. 72272018), the Fundamental Research Funds for the Central Universities (Grant No. 2022CDSKXYJG007) and the China Postdoctoral Science Foundation (Grant No. 2022M710511).