Trade Credit, Ownership and Informal Financing in China

We investigate informal financing such as trade credit in China. The credit for both state-owned enterprises (SOEs) and non-SOEs dramatically increased over time. Our results suggest that non-SOEs rely more on trade credit financing, but this effect is mitigated by supplier's liquidity position. Further results show that during financial crisis, non-SOEs reduce their account receivables due to high financing costs. Our research highlights the importance of informal financing and ownership structure in emerging markets