Business Group、Trade Credit And Growth

Business Groups prevalent in many countries of the world, especially in emergingeconomies lacking institutional body. Currently, research on multi-business group from theexistence of internal capital markets, internal capital markets to ease financing constraintsand the allocation of resources to analyze perspectives that most articles only from internaltransactions between members, even though they have studied the internal capital market andexternal market considered together, it is only study the relationship between business groupsand bank borrowings while there is little relationship between Business Group and tradecredit,and existing research on the business group in the presence or absence of internalcapital markets and conglomerate effective resource allocation is still controversial. Throughanalysis from getting and providing of trade credit, indicating the presence of internalcapital markets which is based on trade credit, business groups affected resource allocationefficiency by trade credit channel and thus conducive to business growth. In this paper, thesystem is in a relatively backward, low levels of investor protection, economic restructuringwhy China ’s rapid economic growth provides a possible explanation.Based on the group-affiliation listed firms’ empirical data from2005to2012, this paperstudies that the business groups impact on trade credit getting and providing, and providesverification for trade credit’s financing and redistribution theory.Further research shows thatthrough trade credit channel business groups will promote the growth of enterprises. Based onthe following theories we have the first three hypothesisies. For financing motive,group-affiliation firms on the one hand by the internal market transactions, external securitymechanisms, trade credit financing complementary relationship with the bank borrowings tofight to get more business credit financing to take advantage of the liquidity provider; on theother hand, because companies Group lending market, strict government regulation ofbusiness groups, alternative trade credit relationship with a bank loan, it will get less tradecredit financing. For redistribution theory and competition hypothesis, compared with theindependent firms, group-affiliation firms on the one hand will obtain internal and externalresources allocated to other company, it will provide more trade credit; On the other handbecause of the group-affiliation firms themselves have stronger competitiveness, so don’t needto improve competitiveness by providing trade credit, and the above phenomenon is moreobvious in high degree of marketization of the region. According to the theory of business group resource allocation efficiency hypothesis4is put forward.Through the research in this paper, we have the following conclusions:(1) Compared with the independent firms, group-affiliation firms are more likely to getmore trade credit. This conclusion shows that group-affiliation firms can make full use of itsadvantages to occupy the liquidity of suppliers.(2)Compared with the independent firms, group-affiliation firms are more likely toprovide more trade credit. This conclusion supports the theory of credit rationing, attached tothe group-affiliation firms in more bank and trade credit, will bring advantage to providemore trade credit in order to improve competitiveness.(3) Further research found that the high degree of marketization, relative to theindependent firms is group-affiliation firms, the more likely to provide more trade credit. Thisis because the high degree of marketization of the region, attached to the group-affiliationfirms are more likely to obtain bank and trade credit, which will provide more trade credit.(4) Compared with the independent firms, group-affiliation firms will use trade creditchannels to promote the growth of the enterprise. It primarily proved that business groupsthrough internal capital markets have positive effect on business.Through the above conclusions, this paper argues that China should speed up themarketization process, give full play to the role of the market this invisible hand. The otherside of Business Group should further strengthen the application of this informal alternativemechanism to better promote enterprise development through trade credit sources.