IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v52y2020i1p1-18.html
   My bibliography  Save this article

Trade credit in economic fluctuations and its impact on corporate performance: a panel data analysis from China

Author

Listed:
  • Qiang Lin
  • Tao Zhang

Abstract

Trade credit is an important auxiliary measure to complete transactions in supply chains, and it is also an important source of short-term financing for companies. This paper uses panel data for Chinese listed companies from 2002 to 2016 to study the impact of Tobin’s Q and bargaining power on trade credit under different economic conditions, and we ultimately study how trade credit affects companies’ performance during economic fluctuations. We find that companies with higher Tobin’s Q values tend to reduce the use of trade credit demand, which increases during the economic expansion period and weakens during the economic downturn. Second, companies with lower bargaining power tend to increase their use of trade credit expansion as a competitive tool; however, this effect will weaken during the economic expansion period and will increase during the economic downturn. We also find that the amounts of trade credit demand and expansion are negatively correlated with corporate performance and that this effect weakens during the economic expansion period and increases during the economic downturn. The cycle of trade credit expansion is positively related to corporate performance. This relationship weakens during the economic expansion and strengthens during the economic downturn.

Suggested Citation

  • Qiang Lin & Tao Zhang, 2020. "Trade credit in economic fluctuations and its impact on corporate performance: a panel data analysis from China," Applied Economics, Taylor & Francis Journals, vol. 52(1), pages 1-18, January.
    • Handle: RePEc:taf:applec:v:52:y:2020:i:1:p:1-18
    DOI: 10.1080/00036846.2019.1621982
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00036846.2019.1621982
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00036846.2019.1621982?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pan, Ailing & Xu, Lei & Li, Bin & Ling, Runze, 2020. "The impact of supply chain finance on firm cash holdings: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 63(C).
    2. Tang, Ying & Li, Zhiyong & Chen, Jing & Deng, Chao, 2021. "Liquidity creation cyclicality, capital regulation and interbank credit: Evidence from Chinese commercial banks," Pacific-Basin Finance Journal, Elsevier, vol. 67(C).
    3. Parvez Alam Khan & Satirenjit Kaur Johl & Shakeb Akhtar, 2022. "Vinculum of Sustainable Development Goal Practices and Firms’ Financial Performance: A Moderation Role of Green Innovation," JRFM, MDPI, vol. 15(3), pages 1-24, February.
    4. Grzegorz Zimon & Andrea Appolloni & Hossein Tarighi & Seyedmohammadali Shahmohammadi & Ebrahim Daneshpou, 2021. "Earnings Management, Related Party Transactions and Corporate Performance: The Moderating Role of Internal Control," Risks, MDPI, vol. 9(8), pages 1-26, August.
    5. Bahadir Karakoç, 2023. "Working Capital Management and Performance in Financially Dependent Firms: Evidence from Developing Asian Economies," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 9(1), pages 37-55.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:52:y:2020:i:1:p:1-18. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.