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Trade credit and productivity: evidence from China's ethnic areas

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  • Junfang Sun
  • Haiqing Hu

Abstract

Using 2004--2009 firm-level microdata for enterprises in China's ethnic areas, we investigate whether trade credit really works as an alternative external financing source. We find statistical evidence that trade credit is positively correlated with enterprise productivity; the result continues to hold when taking into account the intermediate role of the working capital turnover ratio. Moreover, our results confirm the positive impact of bank financing on enterprise productivity. All these findings are particularly tenable for Han enterprises.

Suggested Citation

  • 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.
    • Handle: RePEc:taf:jocebs:v:11:y:2013:i:4:p:279-297
    DOI: 10.1080/14765284.2013.838388
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