Research Article
Digital Finance May Dampen Corporate Trade Credit: Evidence from China’s Prefecture-level Cities
@INPROCEEDINGS{10.4108/eai.27-10-2023.2341986, author={Yinghan Liu and Fat Iam Lam and Leongwong Lei}, title={Digital Finance May Dampen Corporate Trade Credit: Evidence from China’s Prefecture-level Cities}, proceedings={Proceedings of the 4th International Conference on Economic Management and Big Data Applications, ICEMBDA 2023, October 27--29, 2023, Tianjin, China}, publisher={EAI}, proceedings_a={ICEMBDA}, year={2024}, month={1}, keywords={digital finance; corporate trade credit; china’s prefecture-level cities; financing constraints}, doi={10.4108/eai.27-10-2023.2341986} }- Yinghan Liu
Fat Iam Lam
Leongwong Lei
Year: 2024
Digital Finance May Dampen Corporate Trade Credit: Evidence from China’s Prefecture-level Cities
ICEMBDA
EAI
DOI: 10.4108/eai.27-10-2023.2341986
Abstract
China's 14th Five-Year Plan prioritizes the acceleration of the development of the digital economy and its integration with the real economy. In conjunction with this plan, this study examines the impact of China's digital finance development on corporate trade credit. This study matches a sample of Chinese A-share non-financial listed companies with corresponding prefecture-level cities from 2011 to 2021, and empirically examines the relationship between digital finance and corporate trade credit using multiple regression analysis. The regression results indicate that the development of digital finance in China may have an inhibitory effect on business credit, each one-point increase in the level of digital finance in the prefecture-level city will result in an average 0.1 percentage point decrease in business credit for businesses in the prefecture-level city, which remains robust after a series of robustness tests. Heterogeneity analysis reveals that the development of digital finance has a more obvious inhibitory effect on the business credit of private firms, asset-heavy firms, and firms with high financial leverage. By analyzing the mechanism of action, it is found that digital financial development affects business credit through the change of financing constraints.