Does state-owned capital matter for private enterprise: a research based on trade credit

Abstract

The introduction of state-owned capital into private enterprises is an important form of mixed-ownership reform, but it is often labeled as ‘state advancement and private retreat’ or ‘retrogression in reform’ in China. Based on the sample of listed private manufacturers, we find the introduction of state-owned capital can significantly improve trade credit of private enterprises. Due to the complementary advantages, private enterprises benefit from state-owned capital by getting more trade credit. Moreover, we find there will be a profound impact only in the regions with high degrees of marketization. An important policy implication is that we should continue to promote market-oriented reforms and focus on encouraging state-owned capital to enter private enterprises in high marketization regions.