Influencing Factors And Threshold Effect Of Trade Credit In Supply Chain Finance

Supply chain finance is an effective means to alleviate corporate financing constraints,reduce financing costs and supply chain risks.It helps to solve the problem of capital flow obstruction and improve corporate capital utilization in business and industrial development.In recent years,it has received widespread attention in theoretical study and practical application.As an important source of short-term financing of the supply chain,trade credit plays an important role in accelerating the circulation of funds,lubricating circulation and production,and it is of great significance to short-term financing of enterprises in the supply chain relationship.In the modern market economy,trade credit is widely used,accounting for a considerable proportion of short-term capital sources of enterprises.Especially in developing countries where financial institutions are still underdeveloped,factors such as financial repression and banking monopoly generally affect corporate financing capabilities,especially non-state-owned enterprises have been discriminated against by bank for a long time.Hence trade credit with short-term financing function can alleviate the issue of corporate financing constraints to a certain extent.As of December 31,2018,the trade credit supply of China's non-financial A-share listed corporations was about 4.42 trillion RMB,and trade credit demand was about 4.5 trillion RMB.It can be seen that trade credit is widely used in enterprises as informal financing in order to ease difficulties in corporate financing.Trade credit is important to national economy,alleviating the problem of credit discrimination in capital market,and improving the efficiency of capital allocation in China's economic transformation.At present,most studies examine the motivation of trade credit,the cost and benefit of trade credit and the factors affecting trade credit.However,from the results of existing literature studies,some conclusions are controversial.For example,the debate on the substitution effect and complementary effect of trade credit and bank credit,the market power of trade credit supply and resource redistribution effect etc.,have been under discussion.In addition,the current theoretical study on trade credit supply and trade credit demand is divided,and the study of the impact of supplier relationships or customer relationships on trade credit is separated,and theoretical research lags behind practical development.This article establishes a theoretical research framework for trade credit in the context of a supply chain,conducts research from both trade credit supply and trade credit demand,and further extends from dual relationship to the ternary relationship of supply chain on the study of trade credit.This paper applies both qualitative analysis and quantitative analysis,including the following research areas.1.Research on trade credit based on dual perspective.It studies trade credit from the perspective of supply side and demand side,including empirical studies on the influencing factors of trade credit supply and trade credit demand,trade credit and supply chain relationships,and threshold effects.Based on the literature review and related theories,our study put forward research hypotheses,construct panel data regression models from the perspective of trade credit supply and trade credit demand,and introduce the second power of customer concentration and supplier concentration to conduct non-linear regression models.Our study applied the panel data pooled ordinary least squares(OLS)estimation to test the hypotheses proposed in the models.In the robust test,fixed effects,one-stage lagging dynamic least squares method and generalized method of moments(GMM)are applied for further analysis to enhance the robustness of the conclusions.2.Research on trade credit under the ternary relationship in supply chain.Based on the perspective of supply chain finance,the core company,upstream suppliers and downstream customers form a ternary relationship in supply chain finance.By constructing panel data regression model,this research carry out empirical study of the impact of supply chain on trade credit under the ternary relationship,including the stability,interaction and cooperation between supply chain companies.In addition,the research explores the dynamic conversion of trade credit and bank credit under the ternary relationship in supply chain.Applying the Panel Threshold Model(Hansen,1999),supplier concentration and customer concentration were used as threshold variables.The relationship between bank credit and trade credit in supply chain was analyzed.The research extends from the binary relationship to ternary relationship in supply chain,which enriches previous research in the synergy effect of the ternary relationship in supply chain on trade credit,as well as the research in the threshold effects of the dynamic changes of bank credit and trade credit.The main conclusions and contributions of this paper are as follows.Firstly,from trade credit supply perspective,after controlling for variables such as industry,monetary policy,and ownership,the supply of trade credit,"forward credit" represented by accounts receivable,was positively influenced by customer concentration,corporate size,profitability,age,financial leverage and ownership concentration,but negatively determined by inventory and bank borrowing.The demand of trade credit,"backward credit" represented by accounts payable,is significantly positively influenced by supplier concentration,corporate size,Tobin Q,collateral ability,inventory,financial leverage,profitability and ownership concentration,but it is negatively determined by bank borrowing.This study analyzes the main micro and macro factors influencing trade credit,and provides practical guidance for improving the trade credit financing capabilities of enterprises.Secondly,there is a significant non-linear relationship between trade credit and supply chain.In customer relationship transactions,the relationship between trade credit supply and customer concentration has changed from a "customer market power" to "customer compassionate effect",and the two have a significant inverted "U" relationship.Non-state-owned enterprises,product uniqueness and tightened monetary policies would strengthen the inverse "U" relationship between trade credit supply and customer concentration.In supplier relationship transactions,trade credit demand and supplier concentration have shifted from "supplier bargaining power" to "strategic alliance",and the two have a significant "U" relationship.State-owned enterprises and tightened monetary policies will strengthen the "U" relationship between trade credit demand and supplier concentration.The paper conducts research on the non-linear relationship between supply chain relationships and trade credit,which has enriched the previous research.Thirdly,the ternary relationship of core corporation,upstream suppliers and downstream customers has strengthened cooperation compared with binary relationship.When the supplier concentration and customer concentration are high at the same time,the supplier and the customer will provide trade credit support for the enterprise at the same time,and the trade credit financing of the enterprise will increase.The ternary relationship is more stable than the binary relationship,and the ternary relationship can reduce conflict and opportunistic behavior,and improve cooperation in supply chain relationship.The research extends from a binary relationship to a ternary relationship,from "self-interest" based on competition to "altruistic" based on cooperation,emphasizing information sharing,mutual progress,and trust between suppliers and customers in order to create value.Fourthly,there is a dynamic transition between trade credit and bank credit in ternary relationship.When the supplier concentration is low and moderate,trade credit and bank credit show a substitute relationship;when the supplier concentration is high,the two are transformed into complementary relationship.Customer concentration is also a threshold variable for the transformation of the relationship between trade credit and bank credit.When customer concentration is low,trade credit and bank credit show a substitute relationship.When customer concentration is moderate,the two are transformed into complementary relationship.If customer concentration is further increased,the two transformed into a substitution relationship.Through the study of single threshold and double threshold effects,this article extends the linear relationship of traditional substitution effect or complementary effect to a non-linear dynamic transition relationship,hence provides micro-logic for the combination of substitution theory and complementary theory.This article has expanded the research boundary of trade credit,bank credit and supply chain relationship.