EconPapers    
Economics at your fingertips  
 

Trade credit and bank loan: Evidence from Chinese firms

Tsung-Te Lin and Jian-Hsin Chou

International Review of Economics & Finance, 2015, vol. 36, issue C, 17-29

Abstract: We use quarterly data of 1213 Chinese firms from the first quarter of 2006 to the end of 2012 to examine the relationship between trade credit and bank credit. In particular, we investigate how the relation is affected during the 2008–2009 global financial crises. Several findings are noted. First, there is a significantly positive relationship between the supply of trade credit (i.e., accounts receivable) and bank loans and a significantly negative relationship between the demand of trade credit (i.e., accounts payable) and bank loans, indicating a complementary and substitution effect between trade credit and bank loans. Second, this study shows a significant decrease of the demand/supply-side of trade credit at the peak of financial crisis, followed by a subsequent increase of this source of financing after the crisis events. Third, both large and small firms provide significantly less trade credits (accounts receivable) and receive less trade credits (accounts payable) during financial crisis. After the crisis, large firms still provide significantly less trade credit to their customers but receive more trade credits from the suppliers than smaller firms.

Keywords: Financial crisis; Trade credit; Bank loan (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1059056014001786
Full text for ScienceDirect subscribers only

Related works:
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:reveco:v:36:y:2015:i:c:p:17-29

DOI: 10.1016/j.iref.2014.11.004

Access Statistics for this article

International Review of Economics & Finance is currently edited by H. Beladi and C. Chen

More articles in International Review of Economics & Finance from Elsevier
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-05-02
Handle: RePEc:eee:reveco:v:36:y:2015:i:c:p:17-29