Foreign Direct Investment, Trade Credit, and Transmission of Global Liquidity Shocks: Evidence from Chinese Manufacturing Firms

Shu Lin · Haichun Ye

78 citations0/0 files storedReview of Financial Studies

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Working Capital and Financial Performance Global trade and economics Global Financial Crisis and Policies

Abstract

We empirically explore a trade credit channel through which foreign direct investment (FDI) firms can propagate global liquidity shocks to the host country despite its tight controls on portfolio flows. In a large sample of Chinese manufacturing firms, we find robust evidence that FDI firms provide more trade credit than local firms during tight domestic credit periods and that a favorable global liquidity shock amplifies FDI firms’ advantage in trade credit provision. Moreover, the differential responses of FDI and local firms are stronger in financially more dependent industries or in Chinese provinces with less financial depth. Received August 12, 2016; editorial decision May 16, 2017 by Editor David Denis.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 78 citations exist upstream.

References

1991Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations 1996Financial Dependence and Growth 1997Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints?1988Financing Constraints and Corporate Investment 1987Financing Constraints and Corporate Investment 2006Financial Constraints Risk 1963Capital Mobility and Stabilization Policy Under Fixed and Flexible Exchange Rates 1997Trade Credit: Theories and Evidence

Cited by

2021Foreign ownership and corporate excess perks 2019A Review of China's Institutions 2022Labor cost and corporate tax avoidance 2022FDI and firm productivity in host countries: The role of financial constraints 2020Impact of Economic Policy Uncertainty on Trade Credit Provision: The Role of Social Trust 2024Financial spillovers of foreign direct investment: Evidence from China

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.