Suppliers’ bargaining power mainly comes from their market position or top supplier status. However, it is also affected by the horizontal competition from top supplier size homogeneity based on the purchasing proportion of a buyer. Using a sample of listed companies in China, we find an inverted U-shaped relationship between the supplier size homogeneity with shared customers and trade credit provisions. As size homogeneity increases, suppliers may increase (decrease) trade credit provision to expand sales (for cash income). That is, based on the degree of supplier size homogeneity, the homogeneity may strengthen or weaken the supplier competition effect. We also find that if upstream and downstream firms have associated relationships, or if the business environment is poor, the competition effect from supplier size homogeneity is not obvious, whereas the weak financing ability of buyer promotes the supplier competition. In addition, the competition effect from supplier size homogeneity is not observed in state-owned firms.

High-bargaining-power (low-bargaining-power) customer (supplier) firms borrow (lend) more trade credit according to the literature. We study whether this bargaining power effect strengthens or weakens when the credit supply tightens. We construct a Nash bargaining model of trade credit and show that the bargaining power effect weakens if their financing costs increase more than that of the customers. We find support for our theory using a unique database of listed firms in China that discloses firms’ transaction information with important customers and suppliers. Interest-rate sensitive suppliers, proxied by a non-state ownership, a high debt rollover risk, and a high financial constraint index, reduce trade credit to their high-bargaining-power customers during credit contractions.

We examine the effect of the identification of high-tech enterprises on corporate innovation from the perspective of supplier relationship management. We use data from the Shanghai and Shenzhen A-share listed companies in China from 2007 to 2020 as samples and a time-varying difference-in-differences (DID) method. The results show that the identification of high-tech enterprises significantly promotes corporate innovation. The potential mechanism is that there is a sharp decline in the concentration of suppliers, the occupation of suppliers’ trade credit, and the inventory cost of enterprise after getting the identification of high-tech enterprises. Further analyses show that the enterprise identified as a high-tech enterprise tends to be more innovative due to the improvement of the supplier relationship management, leading to a better operating performance. Overall, our findings indicates a positive implementation effect of the policy of identification of high-tech enterprises. This paper not only contributes to the research about the economic consequences of the identification of high-tech enterprises from the perspective of supplier relationship management, but also enriches the existing literature on the effect of the supply relationship on corporate innovation, and supplier relationship management from the perspective of identification of high-tech enterprises. In summary, this study provides a theoretical basis and policy reference for the evaluation of the implementation effect of the policy of identification of high-tech enterprises, and the strengthening of supplier relationship management .

This study examines the impact of climate-transition risks on trade credits for Chinese listed companies from 2007-2017. We develop an index of county-level climate-transition risks faced by Chinese-listed companies using data on local carbon emissions and carbon sequestration when moving towards net zero carbon emissions. Our two-way fixed effects OLS regression results find that local firms facing greater climate-transition risks significantly reduce their trade credit financing. Specifically, a one standard deviation of increase in Risk leads to a 0.73% decrease in trade credit. This reduction is more pronounced for state-owned enterprises (SOEs), firms operating in less competitive industries, and those headquartered in regions without carbon trading markets. Our main finding is robust to a battery of sensitivity tests including the use of alternative measures and lagged independent variables. Results on an Instrumental Variable (IV) method and a differences-in-difference (DiD) analysis suggest a causal relationship between climate-transition risks on trade credit. Further analyses reveal two plausible channels for the effect: increased financial distress risk and enhanced access to bank credit.

This paper exploits China’s first default of state-owned enterprises to study the implicit government guarantee’s effect on SOEs’ trade credit financing. It finds that SOEs increase trade credit by 2.3% of total liabilities, on average, relative to non-SOEs after the first SOE default in China’s bond markets in 2015. The additional reliance on suppliers’ credit is more prominent among SOEs with higher information opacity. It is consistent with the literature where trade credit advantage lies in the suppliers’ superior information, as they can observe their clients through daily transactions. The current paper also finds that trade credits positively affect SOEs when IGG weakens. Overall, the results suggest that the reduction in IGG significantly affects Chinese firms’ financing decisions, highlighting the trade credit advantage against the backdrop of imperfect market institutions.

We investigate whether suppliers value their clients’ ESG profiles in China, the largest emerging market featured with low ESG awareness and severe agency problems. We find a robust and negative impact of Chinese firms’ ESG scores on their access to trade credit. The 2SLS regression results based on the instrumental variable indicate that the impact is casual. Additionally, the impact is more pronounced for firms with higher agency costs, greater information asymmetry, and worse financial performance. These results suggest that suppliers in China view clients’ ESG engagement as costly investments caused by agency problems. Finally, we highlight the economic importance of the impact by showing that trade credit access helps Chinese firms decrease debt costs, increase trade credit supply to downstream firms, and promote R&D inputs.

As the information asymmetry and credit rationing are existing, SME are difficult to gain bank credit. Trade credit, as one of substitution, gives another access to SME finance. Based on three years panel data (from 2007 to 2009) of 196 small and medium listed companies, this paper establishes the empirical models and examines the effects between inter-corporate relationship and trade credit. It finds that: the effects between inter-corporate relationship and trade credit seems like "U"; participate in the business associations, especially provincial associations, has positive impact to gain trade credit; good reputation also has positive impact to gain trade credit, but vulnerable to the macroeconomic. The conclusions of this paper are as follows: one corporate should keep proper relations with other corporates; pay attention to participating in the business associations, especially the provincial associations; even the macroeconomic's impact are very important, the corporate should also pay more attention to the repletion assets' maintenance.

The paper studies the effect of social capital on the firms’ debt capacity and capital structure in China. We measure the social capital of China’s 31 provinces through four indexes: the number of NGOs per capita, the index of trust among peoples, the volunteer blood donation ratio of civics, and the money and material donation of civics. The results show that in those areas with more social capital, the firms are more likely to have higher debt ratio and longer debt maturity, and the firms can get debt financing with less tangible assets. And in those districts, the firms are easier to obtain bank credits and trade credits. The paper has two contributions to the economics literature: first, it confirms the economic value of social capital from a micro view; second, it provides a new perspective to understand the firms’ capital structure choice.