The Digital Transformation Effect in Trade Credit Uptake: The Buyer Perspective

Yuming Zhang, Han Liu, Shuang Li and Chao Xing

Emerging Markets Finance and Trade, 2023, vol. 59, issue 7, 2056-2078

Abstract: Combined with buyer market theory, we attempt to analyze the relationship between digital transformation and trade credit financing from an advantage acquisition perspective. Using financial and text data from the annual reports of Chinese listed companies from 2010–2020, we find that digital transformation has a significant promotion effect on firm trade credit financing. This result is robust after accounting for a series of endogeneity and other tests. A further examination reveals that operation efficiency, information transparency, and reputation are inducement mechanisms. We also find that the promotion effect is particularly more pronounced for state-owned firms in areas with sound product market development and supply chains with lower supplier concentration. These findings have implications for understanding the role played by digital transformation in trade credit financing.

Date: 2023
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DOI: 10.1080/1540496X.2023.2172319

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