Abstract
This study demonstrated that digital transformation can promote the supply of trade credit in China. The results are robust to different measures of trade credit provision and endogeneity. The impact of digital transformation on trade credit provision is more pronounced among firms in regions with lower marketization and worse information environment. This study investigates this potential channel and finds that digital transformation increases trade credit provision by improving firms' financing availability. Overall, the results are consistent with the financial theory of trade credit.
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