Abstract
We demonstrate that, in China, firm investment efficiency gains are associated with the use of short-term debt, especially its trade credit component. During the 2009–2010 economic stimulus plan, such effects were heightened and generally remained persistent in the 2011–2013 poststimulus period. Our findings support the view that the rollover pressure of short-maturity debt and the information advantage of supply chain financing are both effective mechanisms for enhancing firm governance in an environment more susceptible to financial market incompleteness. Consequently, the enormous credit boost during the stimulus plan was more efficiently invested when channelled through firms' supply chains.
Original language | English |
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Journal | European Financial Management |
DOIs | |
Publication status | Accepted/In press - 2023 |
Keywords
- China
- debt structure
- economic stimulus
- investment efficiency
- trade credit
ASJC Scopus subject areas
- Accounting
- Economics, Econometrics and Finance (all)