Financial Ecological Environment,Internal Control Quality And Business Credit

As the economy of the society develops,commercial credit,a financing channel,has been widely used and concerned by enterprises all over the world.Commercial credit is a kind of short term financing provided by various economic entities,which is based on trades of actual goods and services.China's financial system mainly relies on the mode of indirect financing thus the financing channel of enterprises has been largely restricted.Financing is always a difficult problem for the development of enterprises and this issue should be especially concerned by China's enterprises since they are in an emerging market.Enterprises in China tend to take commercial credit as their first choice for financing when facing restrictions,and then financing difficulties can be solved.Enterprises are paying more attention to commercial credit and this provides an opportunity for research on the purpose of commercial credit financing.Compared with traditional bank credit,commercial credit has certain advantages to some extent.The information asymmetry between banks and enterprises can lead to adverse selection and other issues while the closer information flow and more daily business relationship between upstream and downstream enterprises effectively overcome the problems mentioned above.Based on these advantages,factors affecting the level of business credit financing has become the focus of both theoretical and practical circles.The credit degree between enterprises and suppliers makes it possible for the existence of commercial credit financing,so this paper will focus on the relationship between internal control and commercial credit financing as well as the role it plays.Meanwhile,there still exist significant differences among regions according to China's present financial ecological environment.Therefore,we must consider external environmental factors when measuring the level of commercial credit financing.Based on these problems,this paper hopes to explore the relationship between financial ecological environment,internal control quality and business credit financing level so that suggestions can be given to the construction and improvement of China's financial ecological environment and internal control.Based on the literature review of commercial credit financing,internal control and financial ecological environment,companies constantly listed in China's A stock market from 2011 to 2015 have been chose as research samples.Analysis has been conducted focusing on the current situation of these companies' commercial credit financing and internal control quality.According to the theory of ecological system,principal-agent,information asymmetry and signal transfer,three results as follow have been concluded in an empirical research:(1)Commercial credit financing levels can be obtained by China's listed companies differ a lot.(2)The quality of internal control can significantly improve the credit situation and the business credit financing of enterprises.(3)Impact of internal control quality on business credit financing will be weakened when the financial ecological environment has been improved.Since the high quality of internal control could reflect effective internal governance of the corporation,improve the reliability of accounting information and solve information asymmetry between two suppliers and corporations.Based on recognition and control of internal control system and information disclosure of the corporation,suppliers are willing to provide commercial credit.When in a good financial ecological environment,suppliers prefer to rely on information from external sources so that they can protect themselves,thus them rely less on the internal control quality of corporations,and then the willingness of providing commercial credit are reduced.