Commercial Credit Research Articles

The Impact of the Corona virus and trade credit on the profitability and value of companies

This study aimed to identify the impact of the Corona virus and commercial credit risks on the profitability and value of companies. The problem of the study was the presence of real risks that threaten the profitability of companies resulting from commercial credit risks and the Corona crisis. The study adopted the descriptive analytical approach, and the study population represents commercial companies in the Kingdom of Saudi Arabia. Saudi Arabia, and the study concluded with a set of results, the most important of which are: the presence of a significant impact of commercial credit risks on the profitability and value of companies, the existence of a statistically significant relationship between commercial credit risks and corporate profitability, and the study proved the existence of a negative correlation between credit risk and the Corona crisis as an independent variable and between companies’ profitability as a variable. continued. The study recommended that companies should review the mechanisms and procedures taken to confront the risks of commercial credit on the profitability of companies, and review the mechanisms and procedures taken to confront the risks of the Corona crisis on the profitability and value of companies.

Impact of Disaggregated External Debt on Economic Growth: Evidence from Asian Developing Economies

Abstract This study investigate the impact of total and disaggregated external debt on economic growth, across 32 Asian developing economies (ADE) from 1995 to 2020. The study applied the generalized method of moments (GMM) and dynamic common correlated estimator (DCCE) with interaction terms of institutional quality and macroeconomic policy to address the non-linearity, across-country heterogeneity, cross-sectional dependence and endogneity. The empirical results indicate that total external debt and its types initially harm economic growth, except for commercial creditors’ debt, which has positive effects. Short-term, private, and multilateral debt show weaker negative associations compared to long-term, public, and bilateral debt. Incorporating interaction terms in non-linear models reveal a shift from negative to positive impacts, highlighting the importance of robust institutional quality and stable macroeconomic policy in mitigating adverse debt effects. Our findings underline the necessity of tailored policies accounting for specific impacts of different debt types on economic growth. Moreover, highlight the significance of institutional quality and macroeconomic policy standards to manage risks, optimize debt management practices, adjust fiscal policies, and foster sustainable economic growth. Future research should further investigate the broad impact of domestic debt in conjunction with external debt across different countries, time periods, and methodological approaches.

Review of the Impact of ESG Disclosure on Corporate Commercial Credit Financing

ESG is an extension of the concept of green investment, reflecting the concept of sustainable development of enterprises. In order to deeply understand the impact of ESG on corporate trade credit financing, this paper takes the existing research theories of ESG and corporate trade credit financing as an example to study the development background, application prospect, disclosure significance, and existing problems of ESG. At present, the literature on the impact of ESG performance on trade credit financing mainly focuses on three aspects: environment, society, and management. This paper first introduces the development background and application prospect of ESG, then combs the existing research theories related to ESG and corporate commercial credit financing, and finally comprehensively analyzes the significance and existing problems of ESG disclosure in order to help future related research. The results show that the study of ESG is helpful in comprehensively analyzing its potential role in corporate trade credit financing and the current challenges. It is suggested that the research on the relationship between ESG and corporate trade credit financing should be further strengthened in the future to better promote the sustainable development of enterprises and the stability of financial markets.

Unleashing Industry 4.0: Empowering corporate trade credit

Utilizing panel data from publicly listed Chinese manufacturing firms spanning 2013 to 2022, our research demonstrates a direct correlation between the adoption of Industry 4.0 technology and improvements in trade credit. Industry 4.0 also bolsters firms' total factor productivity and internal controls, thereby catalyzing the expansion of trade credit. Notably, this positive effect is accentuated in environments with favorable commercial credit conditions and a lower prevalence of alcohol consumption, particularly within firms guided by top management teams with a strong technological background and a commitment to social responsibility. Through these findings, our study illuminates the pivotal role of Industry 4.0 technology in shaping corporate trade credit dynamics.

Political connections and investment efficiency of renewable energy enterprises: The role of marketization

Using data from 77 listed renewable energy enterprises in China and the threshold effect model, this study investigates the impact of political connections on the investment efficiencies of renewable energy enterprises at different degrees of marketization. A Richardson residual measurement model is applied to measure this efficiency. Further, this study constructs a cash flow sensitivity model to analyze how the political connections affect investment efficiency through financing factors and then analyzes the four external financing channels using a path analysis. The results show that when the degree of marketization is less than 9.280, political connections can improve investment efficiency. When the degree of marketization exceeds 9.280, the influence of political connections on investment efficiency is statistically insignificant. At a low marketization stage, political connections enhance the ability of enterprises to acquire resources through four kinds of external financing channels: bank credit, corporate bonds, commercial credit, and equity financing. This supports investment efficiency by reducing cash flow sensitivity. Due to the differences in the nature of the enterprises and personnel appointments, non-state-owned renewable energy enterprises with political connections experience more significant differences with respect to the impact on investment efficiency under different marketization levels.

Dancing between threats and conflicts: How Chinese energy companies invest amidst global geopolitical risks

Utilizing Chinese A-share listed energy companies from 2002 to 2021, we investigate the relationship between global geopolitical risks (GPR) and corporate investment through panel fixed effects and attempt to elucidate its channel. The main findings are as follows: Different types of GPR have varied impacts on corporate investment; global geopolitical acts (GPRA) significantly promote investment in Chinese energy companies, while global geopolitical threats (GPRT) substantially inhibit it. Channel analysis indicates that the capital hedging effect can explain the impact of GPR on the investment of Chinese energy companies. Moreover, the interactions between GPR and factors such as companies' commercial credit capability, valuation, operational risk, and degree of internationalization are statistically significant. These factors interact with GPRA and GPRT, jointly affecting the investment of Chinese energy companies. After employing a series of robustness tests, our results remain valid. Our research deepens a better understanding of how geopolitical risks influence the investment decisions of energy companies.

The Contagion of Debt Default Risk in Energy Enterprises Considering Carbon Price Fluctuations

Under the constraints of low-carbon transformation goals, energy enterprises have significantly increased their debt default risk levels due to carbon price fluctuations. This article first analyzes the contagion mechanism of debt default risk among energy enterprises, and based on this, constructs a debt default risk contagion model among energy enterprises considering carbon price fluctuations, and then simulates and analyzes the evolution characteristics of debt default risk contagion among energy enterprises. The research results indicate that: (1) As the proportion of carbon emission cost increment and investor sentiment index increase, the stability of the debt network of energy enterprises strengthens. As the ratio of commercial credit among energy enterprises and influence of energy enterprises increase, the impact of debt risk gradually intensifies. (2) The investor sentiment index has a strengthening effect on the influence of energy enterprises, the proportion of commercial credit among energy enterprises, and the proportion of carbon emission cost increment. The commercial credit ratio between energy enterprises and its influence has a mutually reinforcing effect. (3) The investor sentiment index has suppressed debt default risk for various energy enterprises. The joint risk suppression effect of the proportion of carbon emission cost increment and the influence of energy enterprises in petroleum and petrochemical enterprises is more prominent. The joint risk constraint ability between the proportion of carbon emission cost increment and investor sentiment index in coal enterprises is stronger.

Corporate social responsibility on trade credit financing capacity: Facilitation or inhibition?

Corporate social responsibility and trade credit financing are increasingly emphasized by investors and management. Using data from Chinese A-share private listed companies from 2010 to 2021, this paper finds that CSR practices significantly enhance trade credit financing capacity, with this effect being more pronounced in enterprises located in regions with favorable commercial credit environments and samples of firms with high-quality disclosure. Furthermore, we identify three potential mechanisms: improving internal control quality, reducing operational risk, and enhancing supplier relationship stability. The findings underscore the important role of CSR in improving corporate financing ability and provide valuable insights for management practices.

Realism’s Reputations, Financialized Whiteness

This essay uses the legal rearticulation of reputation as white heteropatriarchal property in an “Imperial Jim Crow” United States to piece apart the preoccupation with characters’ reputations in realist fiction. It focuses on two later-nineteenth-century arenas of what property theorist and legal scholar K-Sue Park has called the “generative dynamics” of racial capitalism: new markets in private commercial credit and the socio-legal (re)production of reputation. In so doing, the essay unearths realism’s invisiblized generic presupposition that the idea of reputations that help create modern literary characters are a neutral or self-evident category of experience.

How does business credit environment affect exports performance of small and medium-sized enterprises: Evidence in China

This paper uses matched data from the CSMAR database and the China City Statistical Yearbook through a fixed effects model to examine the impact of business credit environment on small and medium-sized enterprises (SMEs) exports at the city level in China. Considering the possible endogenous problems, this paper chooses the number of scholars in Ming and Qing dynasties as the instrumental variable of urban commercial credit environment. The empirical results show that: Firstly, the improvement of urban business credit environment has a significant contribution to the export growth of enterprises; Secondly, the mechanism of the role of urban business credit environment on SMEs exports is mainly expressed through promoting R&D investment and enhancing market dynamics; Thirdly, the business credit environment is more obvious to state-owned enterprises, eastern regions and cities with less trade freedom. With the development of urban business credit environment, individuals or companies join the competition in the industry through new start-ups to stimulate corporate exports, and existing SMEs promote corporate exports through local preferential policies, increased investment in R&D, and optimized innovation policies as well as resource allocation.

How does green finance policy affect firms' pro‐environmental mergers and acquisitions?

AbstractThe study reveals that the Green Credit Guidelines significantly encourage firms' pro‐environmental mergers and acquisitions (M&As) among polluting industries, as evidenced by difference‐in‐differences estimations with Chinese listed firms (2004–2020). Three primary mechanisms include increased commercial credit financing, improvements within firm agencies, and heightened scrutiny from external analysts. The effect is more prominent in non‐state‐owned firms, firms with a higher number of executives with financial backgrounds, and regions with lower levels of green financial development and environmental regulations. Post‐M&A, acquiring firms demonstrate a marked decrease in environmental governance expenses and carbon emissions, alongside an improvement in overall environmental performance.

Impact of supply chain finance on the business risk of core enterprises: evidence from China

Purpose This study aims to explore the relationship between supply chain financing (SCF) and the business risks of core enterprises, the economic value of SCF for core enterprises and the motivation for core enterprises to participate in SCF. The authors also examine the mediating effects of financing constraints. Design/methodology/approach This study analyzes the panel data of 393 companies listed on the main board of the A-share market in China from 2011 to 2014 using fixed-effect and intermediary-effect models. Findings The development of SCF in core enterprises can significantly reduce business risk by alleviating financing constraints. Research limitations/implications The study sample is from China’s A-share market, which may limit the ability to generalize results. The indicators used to measure SCF primarily consider commercial credit, which may have affected the accuracy of the study. Practical implications This study provides a new basis for core enterprise managers in the manufacturing sector to conduct SCF and control business risks. SCF with small and medium-sized upstream and downstream enterprises can reduce business risks and enhance competitiveness, especially under financing constraints. Originality/value This study focuses on core enterprises, a topic less explored in academia. It examines the impact of SCF on their performance and the mediating role of financing constraints. This study offers a novel perspective on the SCF transmission mechanism of supply chain finance and provides new insights for core enterprises.

Bank failures and economic activity: Evidence from the Progressive Era

During the Progressive Era (1900–29), economic growth was rapid but volatile. Boom and busts witnessed the formation and failure of tens of thousands of firms and thousands of banks. This essay uses new data and methods to identify causal links between failures of banks and bankruptcies of firms. Our analysis indicates that bank failures triggered bankruptcies of firms that depended upon banks for ongoing access to commercial credit. Firms that did not depend upon banks for credit did not fail in appreciably larger numbers after banks failed.

The crowding out effect of local government debt expansion: Insights from commercial credit financing

Understanding the impact of local government debt expansion on microeconomic entities is crucial in evaluating local government debt policies. This study explored the crowding-out effect of local government debt on firms' commercial credit financing. We found that local government debt plays a crucial role in enhancing corporate commercial credit financing by exacerbating the financing constraints faced by firms. Second, the impact of local government debt on commercial credit financing is more pronounced for firms with lower leverage and a more stable capital chain. Third, state-owned enterprises (SOEs) are more susceptible to the impact of local government debt on commercial credit financing compared to private enterprises. And the crowding-out effect of local government debt on firms' commercial credit financing is more pronounced in the regions where the credit market regulation is relatively weaker. Our findings provide valuable insights that can contribute to the reform of the local government debt management system.

Environmental pollution liability insurance and commercial credit financing

ABSTRACT Environmental risk issues for heavily polluting enterprises are a significant concern for both society and scholars; raising awareness of pollution liability insurance is essential for sustainable development. Within the context of green development, we focus on a unique environmental pollution liability insurance (EPLI) system and examine its relationship with commercial credit. We empirically test this relationship using regression analysis, propensity score matching (PSM), and placebo tests. We find that subscribing to EPLI significantly improves commercial credit financing. This effect is particularly strong in state-owned enterprises, financially developed areas, and regions where governments prioritize environmental issues. Our conclusions remain valid after robustness tests. A mechanism analysis reveals that supplier bargaining power and the value of collateral assets are key mechanisms through which EPLI enhances commercial credit financing.

Gender Disparities and Social Responsibilities as a Barrier to the Adoption of E-Commerce for Women Entrepreneurs of India in the MSME Sector

Gender-based obstacles that prevent women from beginning and expanding their enterprises include unequal distribution of family and domestic duties, restricted mobility, discriminatory property, marriage, and inheritance laws and/or cultural traditions. When it comes to accessing resources such as commercial credit from formal financial service providers, more lucrative markets rather than traditional local markets, technology and information to launch and expand their businesses, national incentives in small enterprise development through gender-blind private sector development, fiscal policies and legislation, and training and education for small enterprise development, women entrepreneurs are less privileged than men due to these factors combined with social exclusion based on gender. In the informal sector, women entrepreneurs running micro and small companies significantly improve the financial security of their families and communities. They have little chance of creating successful firms as long as they are not covered by SME development laws and initiatives. In order to address these issues, this research paper takes a development and rights-based strategy that strives to meet the real-world needs of female entrepreneurs, eliminate the political, legal, and sociocultural obstacles to their success, and promote an atmosphere that is supportive of both gender equality and business growth.

Analisis Hukum Peran Bank Dalam Pembiayaan Proyek Infrastruktur di Indonesia

Infrastructure development in Indonesia can be a factor in the country's progress. because with adequate infrastructure, it can create economic growth and raise the quality of other sectors. Infrastructure development must be encouraged by various parties, one of which is banks. Banking has an important role in infrastructure development, because banks can help the government finance infrastructure projects by purchasing securities and through lending. The method used is normative legal research which focuses on laws and other policies related to the development and financing of infrastructure projects. As a result, in helping the government to finance infrastructure projects, banks provide products in the form of investment credit, syndicated credit, project financing, sharia financing and commercial credit. as the legal basis for financing infrastructure projects in Indonesia, Bank Indonesia issued and ratified PBI No. 23/7/PBI/2021 concerning Implementation of Payment System Infrastructure. With the large role of banks in financing infrastructure projects, it is hoped that they can support national development and encourage better growth in the infrastructure sector in the future. The government and banks need to continue to collaborate well in developing and improving a more effective and sustainable infrastructure project financing system, for the progress of the nation and state.

To their Credit: The Aristocracy and Commercial Credit in Europe, c.1750–1820

The aristocracy and their use of commercial credit are seldom explored in the European comparative context despite important studies of the French aristocracy and their credit relations with shopkeepers, tradesmen and fashion merchants. This article studies the aristocracy and commercial credit in England, Germany and Sweden, by drawing on the normative literature and the account books, receipted bills, correspondence and diaries of several families occupying different echelons of the nobility. We examine the extent and nature of aristocratic engagement with shop credit, the ways in which they manipulated and managed this credit, and their motivations for doing so. We argue that the aristocracy was involved in a modern commercial credit economy and that this was central to their position in society and way of life. Our analysis of the ideals communicated through conduct books and parental advice and the actual credit practices of the aristocracy show that they took their credit arrangements seriously. They had to abide by the rules of commercial credit and settle their accounts: sometimes promptly, most often in a timely manner and only occasionally after considerable delay. The article offers a comparative framework for further and broader studies on the aristocracy within economic history.

TRADE CREDIT POLICY AND THE FINANCIAL SITUATION OF DAIRY COOPERATIVES

Aim: The aim of the study is to examine the financial health of dairy cooperatives in relation to their credit position and trade credit strategy. Methods: Using the author’s synthetic indicator, the position and strategy for granting trade credit were determined, and the levels of profitability, liquidity, debt, and management efficiency were assessed in separate groups of entities: conservative, moderate, and aggressive recipients, versus conservative, moderate, and aggressive providers. The research carried out in the field of trade credit management at dairy cooperatives allowed us to establish that the financial position of the analyzed entities varied depending on their credit position and trade credit strategy. Results: The highest level of ROE was found in the group of entities categorized as conservative recipients, where this indicator was 11.1%. Simi­larly, the group of moderate providers also had a high level of 7.1%. On the other hand, the lowest level was found in the return on sales indicator, which was 0.3% and 0.4% in the moderate recipient and aggressive provider groups, respectively. Additionally, cooperatives following a conservative trade credit strategy had a higher level of return on sales compared to the cooperatives classified in the aggressive provider group. Conclusions: The profitability of assets, funds, and sales, as well as the level of liquidity, varied among the distinguished group of cooperatives based on their position and commercial credit strategy. However, there was no variation observed in terms of the level of indebtedness.

'Forgetting' or 'Precipitation': Literary inquisition in Qing Dynasty and modern enterprise risk preference.

This paper takes the risk preference of modern listed companies as the research object, uses the financial data of Chinese listed companies combined with the literary inquisition file in Qing Dynasty to conduct an empirical study, and examines the influence of literary inquisition on the risk preference of modern corporate CEOs in Qing Dynasty. The study found that the literary inquisition incident in Qing Dynasty significantly affected and reduced the risk preference of modern enterprises. The competitive hypothesis of the influence of Confucian culture and China City Commercial Credit Environment Index (CEI) on CEOs' risk preference is excluded. In addition, through the study of heterogeneity, this paper also verifies that the influence of literary inquisition is more significant in areas with a higher degree of marketization, indicating that the influence of informal institutions depends on the establishment of formal institutions. Finally, in the mechanism study, this paper points out that the rulers' suppression of ideas will change long-term social capital and lead to the decrease of general trust in society, which will make the enterprise managers born in the region tend to be conservative in their risk preference.