Do technology export regulations impact corporate trade credit financing? Evidence from China

Haoyang Li, Xue Wang, Chenyang Liu and Lin Han

International Review of Financial Analysis, 2024, vol. 96, issue PA

Abstract: Based on an exogenous shock—the 2008 revision of the Catalog of Technologies Prohibited and Restricted from Export in China—we use a difference-in-differences (DID) research design to examine the impact of technology export restrictions (TERs) on corporate trade credit financing. We document that TERs limit a firm's access to trade credit. Specifically, TERs reduce corporate trade credit by approximately 44 % compared with that of an average firm in the sample. Moreover, the negative impact is more pronounced for firms with high financial risk or high product risk. Additionally, our tests show that both upstream and downstream firms reduce their provision of trade credit to firms impacted by TERs. The results suggest that TERs add trade barriers between countries, resulting in restricted corporate trade credit financing.

Keywords: Technology export regulations; Trade credit financing; Product risk; Financial risk (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:96:y:2024:i:pa:s1057521924005295

DOI: 10.1016/j.irfa.2024.103597

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