Creditor protection and trade credit financing: Evidence from a quasi-natural experiment in China

Shihao Wang, Jiamin Wang, Umer Sahil Maqsood, Keyun Wang and Qian Li

Finance Research Letters, 2023, vol. 57, issue C

Abstract: Based on the listed firms in China's A-share stock market from 2012 to 2021, we investigate the relationship between the introduction of bankruptcy courts and trade credit financing. The empirical results show that firms obtain more trade credit after the introduction of bankruptcy courts in their location. This finding is robust to a series of endogeneity and robustness checks. We further find that the effect of bankruptcy courts on trade credit financing is more pronounced when the firm has a greater distance from its suppliers and higher financial distress. Overall, our findings show the positive effect of the introduction of bankruptcy courts and have important implications for policymakers in emerging markets.

Keywords: Bankruptcy courts; Trade credit; Supply chain; Creditor protection; China (search for similar items in EconPapers)
JEL-codes: G32 G33 K35 K42 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:57:y:2023:i:c:s1544612323005986

DOI: 10.1016/j.frl.2023.104226

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