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Does cultural diversity affect trade credit provision?

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  • Ma, Liang
  • Wang, Yuetang
  • Yuan, Yuan

Abstract

This study demonstrates that cultural diversity promotes the trade credit provision in China. The main findings remain robust across various measures of trade credit provision and after addressing potential endogeneity concerns. Mechanism analysis reveals that cultural diversity enhances trade credit provision by improving the stability of customer relationships within supply chains and alleviating financing constraints. The impact of cultural diversity on trade credit provision is particularly significant for firms in non-Mandarin-speaking regions, coastal areas, and non-state-owned enterprises. Overall, the results align with the financial theory of trade credit.

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  • Ma, Liang & Wang, Yuetang & Yuan, Yuan, 2025. "Does cultural diversity affect trade credit provision?," Pacific-Basin Finance Journal, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:pacfin:v:94:y:2025:i:c:s0927538x25002896
    DOI: 10.1016/j.pacfin.2025.102952
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