Efficiency of Trade Credit Finance in China

Go Yano and Maho Shiraishi ()
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Maho Shiraishi: Faculty of Foreign Studies, University of Kitakyushu, 4-2-1, Kitagata, Kokuraminami-ku, Kitakyushu City, 802-8577, Japan.

Comparative Economic Studies, 2012, vol. 54, issue 1, 203-225

Abstract: Using 1999–2006 firm-level microdata for rural firms in China, we investigate the efficiency of financial intermediation through trade credit. We find statistical evidence that financial intermediation through trade credit is more efficient than bank finance. Although trade credit can be viewed as encouraging the survival and growth of prospective small (and young) firms from a financial point of view, it is especially helpful for medium-sized firms in terms of access to funds.

Date: 2012
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