This study examines how firm-specific characteristics and monetary tightening influence the composition and dynamics of trade credit received by Chinese listed firms. Using panel data, the analysis distinguishes among three sources of trade credit: related parties, non-related parties, and controlling shareholders. The findings reveal a clear asymmetry in firms’ financing responses to monetary tightening: while trade credit from non-related parties declines, credit from related parties—especially controlling shareholders—increases. This underscores the strategic role of intra-group financing in buffering firms against external financial shocks during periods of constrained liquidity. Moreover, firm-specific factors such as size, profitability, market power, and ownership have differing effects depending on the source of trade credit. These effects are most pronounced when the credit is extended from controlling shareholders, reflecting the influence of intra-group trust and reduced information asymmetries. The results also highlight a substitute relationship between bank credit and trade credit, which weakens when trade credit is sourced from related parties and disappears entirely in the case of controlling shareholders. By shedding light on the distinct mechanisms of intra-group trade credit in China’s underdeveloped financial system, this study contributes to a deeper understanding of corporate financing strategies of Chinese firms.

This paper investigates the causal impact of pre-trade transparency on the market liquidity of an over-the-counter-style market by leveraging a natural experiment in China’s interbank corporate bond market. We find that turnover, market liquidity, and aggregate bond returns significantly declined when the regulators unexpectedly suspended real-time quote dissemination in March 2023. Consistent with our expectation, these effects were mainly focused on interbank bonds, not exchange bonds, and bonds with lower credit ratings and longer maturities. This study contributes novel evidence to the transparency literature and provides insights for policymakers in emerging markets weighing the trade-offs between data governance and market efficiency.

This paper examines the impact of social distrust on household saving in China using a microsample from the China Family Panel Studies (CFPS). We find that social distrust leads to an increase in savings within households, in which households not living alone, with higher levels of education and urban households are more affected. We also find that social distrust affects household savings through raising risk expectations, reducing credit availability and amplifying risk spillovers from real estate markets.

We examine the effects of issuing green bond on green premium and green signal transmission by matching green bonds with ordinary bonds. We find that the credit spread of green bonds is significantly lower than that of ordinary bonds, especially for those green bonds with lower information disclosure complexity. Besides, issuing green bonds cannot receive a positive response from the stock market, but can significantly reduce issuer’s loan costs and provide more financial subsidies for high polluting issuers. Furthermore, by obtaining discounted loans and financial subsidies, issuing green bonds can increase issuer’s R&D intensity and reduce their carbon emissions. These findings indicate that issuing green bonds can reduce financing costs and convey green signals to market stakeholders with less investment experience.

We construct a new geospatial measure using high-resolution river vector data from National Geomatics Center of China (NGCC) to study how urban riparian exposure shapes local government debt financing costs. Our base-line results show that cities with higher riparian exposures have significantly lower credit spreads, with a one-standard-deviation increase in riparian exposure reducing credit spreads by approximately 12 basis points. By comparing cities crossed by natural rivers with those intersected by artificial canals, we disentangle the dual role of riparian zones as sources of natural capital benefits (e.g., enhanced transportation capacity) versus climate risks (e.g., flood vulnerability). We find that climate change has amplified the impact of natural disasters, such as floods and droughts, particularly in riparian zones, thus weakening the cost-reducing effect of riparian exposure on bond financing. In contrast, improved water infrastructure and flood-control facilities strengthen the cost-reduction effect. Our findings contribute to the literature on natural capital and government financing, offering valuable implications for public finance and risk management.

Trade credit is a vital external source of financing, playing a crucial role in redistributing credit from financially stronger firms to weaker ones, especially during difficult times. However, it is puzzling that the redistribution perspective alone fails to explain the changes in trade credit when firms get involved in major litigation, which can be seen as an external shock for firms. Based on a firm-level dataset of litigations from China, we find that firms involved in major litigation not only exhibit an increased demand for trade credit but also extend more credit to their customers. Our further analysis reveals that whether as plaintiffs or defendants, litigation firms experience an increase in the demand and supply of trade credit. Moreover, compared to plaintiff firms, defendant firms experience a more pronounced increase in the demand for trade credit. Using firms’ market power and liquidity as moderators, we find that the increase in the demand for trade credit is more likely due to firms’ deferred payments rather than voluntary provision by suppliers, and the increase in the supply of trade credit appears to be an expedient measure to maintain market share. Generally, our results provide evidence of credit contagion effect within the supply chain, where the increased demand for trade credit is transferred from firms’ customers to themselves when they get involved in major litigations, while the default risk is simultaneously transferred from litigation firms to upstream firms.

This paper analyzes the impact of risk disclosures in bond prospectuses on the credit risk premium in the Chinese corporate bond market through six textual characteristics comprehensively. In the empirical analysis, the collected 5199 bond prospectuses and structured data concerning control variables from 2006 to 2021 are used to perform the fixed effect regression analysis. The results show that fewer Words, less Boilerplate, higher Fog Index, more HardInfoMix, more Redundancy, and higher Specificity of risk disclosures in bond prospectuses will lead to a higher credit risk premium. Further tests demonstrate that ceteris paribus, the negative impact of Words and Boilerplate will be strengthened by implicit government guarantees carried by a state-owned enterprise but be weakened by better corporate business performance. However, ceteris paribus, positive effects of the Fog Index, HardInfoMix, Redundancy, and Specificity will be weakened when the bond issuer is state-owned but be strengthened by better corporate business performance.

We study how politicians' activities affect the stock market and firm performance. Using hand-collected data on China's national leaders' corporate visits, we investigate the industry-wide implications of these visits. We find that over the six days surrounding a visit, an average industry peer's value increases by 2\% of its total assets. This result reflects investors' favourable interpretation of leaders' visits as a signal of more government support for the entire industry. However, the industry peer's profitability plummets by more than 15\% in the next three years. Further analysis reveals that after the visits, industry peers increase their investments, presumably in anticipation of additional government subsidies and credits. However, these resources are insufficient, and the profitability of these firms suffers. Our findings suggest that national leaders' visits do not help boost the targeted industries, and firms should carefully interpret the politicians' activities.

Facing external shocks, maintaining and stabilizing imports is a major practical issue for many developing countries. We first document that sourcing market switching (SMS) is widespread for Chinese firms (For 2000-2016, SMS firms account for 76.29% of all import firms and 96.30% of total import value). Then we use Chinese firm-level data to show that SMS can significantly mitigate the negative impacts of international uncertainty on imports, which further stabilizes firm employment and innovation, leading to increases in national and even world welfare. Possible motivations for SMS include stabilizing import supply, lowering import tariffs, raising the real exchange rate, and increasing product switching. We also find that the effects of SMS vary by the type of uncertainty, firm ownership, productivity, credit constraints, trade mode, and product features.

We investigate the effect of third-party certification for green bonds by analyzing its impact on issuer's future green innovation performances. We find that third-party certification for green bonds can significantly promote issuer's future green innovation performances. Furthermore, the promotion effect is more prominent in non-state-owned issuers, large issuers and heavy polluting issuers, and can be more significantly exerted by professional and reputable third-party certification agencies. Besides, third-party certification for green bonds can play the effect by reducing the issuer's tax expenditure, increasing the issuer's loan financing, and receiving a positive response in stock returns. But unexpectedly, it cannot play the effect by further reducing the credit spread of green bonds. Our findings indicate that independent external supervision can play a positive role in green bond issuance, but there is still a long way to go.