Formal Finance and Trade Credit During China's Transition
Using a large panel dataset of Chinese industrial firms, the authors examine the determinants of access to loans from formal financial intermediaries and extension of trade credit. Poorly performing state-owned enterprises were more likely to redis...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2007/04/7537723/formal-finance-trade-credit-during-chinas-transition http://hdl.handle.net/10986/7022 |
| Summary: | Using a large panel dataset of Chinese
industrial firms, the authors examine the determinants of
access to loans from formal financial intermediaries and
extension of trade credit. Poorly performing state-owned
enterprises were more likely to redistribute credit to firms
with less privileged access to loans through trade credit, a
pattern consistent with some of the extension of trade
credit being involuntary. By contrast, profitable private
domestic firms were more likely to extend trade credit than
unprofitable ones. Trade credit likely provided a substitute
for loans for these private firms' customers that were
shut out of formal credit markets. As biases in lending
became less severe, the amount of trade credit extended by
private firms declined. |
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