Commercial Credit Financing and Corporate Risk-Taking: Inhibiting or Facilitative?

Yongxia Wu (), Haiqing Hu and Xianzhu Wang
Additional contact information
Yongxia Wu: School of Economics and Management, Xi’an University of Technology, Xi’an 710054, China
Haiqing Hu: School of Economics and Management, Xi’an University of Technology, Xi’an 710054, China
Xianzhu Wang: School of Business, Anhui University of Technology, Ma’anshan 243032, China

Sustainability, 2024, vol. 16, issue 16, 1-22

Abstract: Improving the level of risk-taking is an important measure for enterprises to realize sustainable development; in this context, commercial credit financing has become an important type of transaction and an indispensable short-term financing method. In this work, we use a sample of A-share-listed companies listed from 2007 to 2021 to test the impact of commercial credit financing on corporate risk-taking. Research shows that commercial credit financing has a U-shaped relationship with corporate risk-taking, i.e., when there is a low level of commercial credit financing, it has an inhibitory effect on corporate risk-taking, and when the level of commercial credit financing is high, it has a promotional effect on corporate risk-taking. The main reason for this, based on substitute financing and buyer market theories, is that commercial credit financing has a “double-edged sword” effect. Further research has found that corporate financialization, debt default risk, and ownership form all have moderating effects on this U-shaped relationship. Heterogeneity analysis results show that among enterprises with good cash flow conditions, low financing constraints, and a low supply of commercial credit, commercial credit financing has a significant U-shaped impact on enterprise risk-taking. However, among enterprises with poor cash flow conditions, high financing constraints, and a high supply of commercial credit, commercial credit financing shows a solely inhibitory effect on enterprise risk-taking. This research innovatively clarifies the dual role of commercial credit financing in corporate risk-taking from the perspective of the supply chain, and these findings are pivotal in guiding enterprises to rationally allocate commercial credit financing and make informed risk investment decisions to realize the simultaneous sustainable development of enterprises and supply chains.

Keywords: commercial credit financing; risk-taking; sustainability; enterprise financialization; debt default; commercial credit supply; financing constraints (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2071-1050/16/16/6813/pdf (application/pdf)
https://www.mdpi.com/2071-1050/16/16/6813/ (text/html)

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:gam:jsusta:v:16:y:2024:i:16:p:6813-:d:1452677

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().