EconPapers    
Economics at your fingertips  
 

Inventory investment and the choice of financing: Does financial development play a role?

Junhong Yang, Alessandra Guariglia, Yuchao Peng and Yukun Shi

Journal of Corporate Finance, 2022, vol. 74, issue C

Abstract: This paper uses a panel of 224,604 Chinese firms over the period 2004–2009 linked with a set of unique city-level financial development data to examine how financial development affects the way corporate inventory investment is financed. We find that financial development enhances the use of interest-bearing loans and discourages the use of trade credit in financing inventory investment. These effects are more pronounced after the 2007 property rights reform, as well as for privately-owned firms, small firms, firms with no political connections, and firms located in coastal regions. Our results are robust to using a variety of different specifications, as well as different measures of financial development and estimation methods.

Keywords: Financing choice; Trade credit; Interest-bearing loans; Inventories; Financial development; Financing constraints (search for similar items in EconPapers)
JEL-codes: D92 E22 G3 O16 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0929119921002613
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Inventory investment and the choice of financing: Does financial development play a role? (2020) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:74:y:2022:i:c:s0929119921002613

DOI: 10.1016/j.jcorpfin.2021.102139

Access Statistics for this article

Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter

More articles in Journal of Corporate Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2024-07-05
Handle: RePEc:eee:corfin:v:74:y:2022:i:c:s0929119921002613