Abstract
This paper explores the role of social network on informal financing from a new aspect. Utilizing educational background of senior managers and location of major suppliers of listed firms as well as the classification of universities and colleges in China, we find that social connection based on shared school geographical relationship between senior managers and major supplies increases trade credit, especially when such relationship is constructed in local universities. Such effect varies with geo-culture, economic development, and maturity of financial market, but firm ownership does not play a significant role. This paper contributes to the literature of social connection and informal financing.
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