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External finance and trade credit extension in China: does political affiliation make a difference?

Guariglia, Alessandra; Mateut, Simona

Authors

Alessandra Guariglia



Abstract

© 2013 Taylor & Francis. Using a dataset of 65,706 Chinese firms over the period 2000–2007, we show that politically affiliated firms benefit from easier access to short-term external finance and extend more trade credit than their non-affiliated counterparts. Furthermore, we observe that the sensitivity of trade credit extension to short-term liabilities, which is largest for private firms producing differentiated goods, decreases with the degree of political affiliation. This suggests that gaining political affiliation contributes not only to alleviating individual firms’ financing constraints, but also to reducing the overall level of constraints in the economy through the additional trade credit being made available.

Journal Article Type Article
Publication Date May 2, 2016
Journal European Journal of Finance
Print ISSN 1351-847X
Electronic ISSN 1466-4364
Publisher Taylor & Francis (Routledge)
Peer Reviewed Peer Reviewed
Volume 22
Issue 4-6
Pages 319-344
APA6 Citation Guariglia, A., & Mateut, S. (2016). External finance and trade credit extension in China: does political affiliation make a difference?. European Journal of Finance, 22(4-6), 319-344. https://doi.org/10.1080/1351847X.2012.762030
DOI https://doi.org/10.1080/1351847X.2012.762030
Keywords trade credit extension; political affiliation; short-term liabilities; Chinese firms JEL Classification: G31; K0; P2
Publisher URL https://www.tandfonline.com/doi/abs/10.1080/1351847X.2012.762030
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