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Efficiency of Trade Credit Finance in China

Author

Listed:
  • Go Yano

    (Graduate School of Economics, Kyoto University, Yoshida-honmachi, Sakyo-ku, Kyoto, 606-8501, Japan.)

  • Maho Shiraishi

    (Faculty of Foreign Studies, University of Kitakyushu, 4-2-1, Kitagata, Kokuraminami-ku, Kitakyushu City, 802-8577, Japan.)

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.

Suggested Citation

  • Go Yano & Maho Shiraishi, 2012. "Efficiency of Trade Credit Finance in China," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 54(1), pages 203-225, March.
    • Handle: RePEc:pal:compes:v:54:y:2012:i:1:p:203-225
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    Cited by:

    1. Esho, Ebes & Verhoef, Grietjie, 2018. "The Funding Gap and the Financing of Small and Medium Businesses: An Integrated Literature Review and an Agenda," MPRA Paper 90153, University Library of Munich, Germany, revised 21 Nov 2018.
    2. Bai, Min & Cai, Jifu & Qin, Yafeng, 2021. "Ownership discrimination and private firms financing in China," Research in International Business and Finance, Elsevier, vol. 57(C).
    3. Junfang Sun & Haiqing Hu, 2013. "Trade credit and productivity: evidence from China's ethnic areas," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 11(4), pages 279-297, November.
    4. Shou, Yongyi & Shao, Jinan & Wang, Weijiao & Lai, Kee-hung, 2020. "The impact of corporate social responsibility on trade credit: Evidence from Chinese small and medium-sized manufacturing enterprises," International Journal of Production Economics, Elsevier, vol. 230(C).

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