The effect of the COVID-19 pandemic on corporate trade credit financing

Wenlan Xie and Haowen Tian

Economics Letters, 2023, vol. 232, issue C

Abstract: Using a difference-in-differences (DiD) model, this study investigates the causal relationship between the COVID-19 pandemic and trade credit financing. We find that the pandemic significantly increases trade credit financing for companies that are strongly affected by COVID-19. This may because of the increasing cost of bank lending; companies turn to more flexible and less costly alternatives as a result. A parallel trend test supports this finding. This research provides implications for corporate managers, supply chain partners, and capital market investors.

Keywords: COVID-19 pandemic; Trade credit financing; Chinese study (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:232:y:2023:i:c:s0165176523003646

DOI: 10.1016/j.econlet.2023.111339

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