Bank credit and trade credit: Evidence from natural experiments

Chen, Shenglan; Ma, Hui; Wu, Qiang

doi:10.1016/j.jbankfin.2019.105616

Cited by 97 publications

(55 citation statements)

References 44 publications

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“…The mean cost of debt (variable R d ) is 0.025, with a minimum value of 0.001 and a maximum value of 0.080, implying that the cost of debt varies greatly in our research sample. The mean cost of debt is similar to that reported in previous studies, for example, 0.033 in Zou and Adams's (2008) research, and the means of the control variables are also similar to those reported in previous research by Chen, Ma, and Wu (2019), Jiang, Lee, and Yue (2010), Lin, Ma, Malatesta, and Xuan (2011), and Zou and Adams (2008), suggesting that our sample is comparable with samples used in other studies. Table 5 presents the Pearson correlation matrix of the firms' major characteristics with the average variance inflation factor (VIF) being 2.37, indicating that multicollinearity is not a concern.…”

Section: Resultssupporting

confidence: 88%

Investor protection and cost of debt: Evidence from dividend commitment in firm bylaws

Yang

Wang

et al. 2020

Corporate Governance

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Research Question/Issue: This study seeks to explore a new type of investor protection mechanism-dividend commitment in firm bylaws-that has emerged from a new Chinese dividend regulation. Dividend commitment, forcing firms to make an explicit commitment to maintain a given dividend level, may affect the benefit and risk of debtholders and, accordingly, their required returns. Research Findings/Insights: Using a sample of Chinese listed firms between 2006 and 2017, we find a significantly lower cost of debt for high-commitment firms than for low-commitment firms. The differences are pronounced for firms that actively respond to the regulation, those that operate in a weaker information environment, those that suffer from higher agency costs due to insider control, and those with lower debt ratios. Theoretical/Academic Implications: This study provides empirical evidence of the economic consequences of dividend commitment. The results suggest that dividend commitment is associated with changes in the benefits and risks of debtholders and that such an association is conditional on firm-level factors; thus, the findings contribute to investor protection theory. Practitioner/Policy Implications: This study provides insights to policy makers interested in evaluating investor protection in an emerging economy. The results highlight the financial implications of an innovative investor protection mechanism.

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Section: Resultssupporting

confidence: 88%

Investor protection and cost of debt: Evidence from dividend commitment in firm bylaws

Yang

Wang

et al. 2020

Corporate Governance

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“…The capital of any business entity is divided into equity and borrowed capital' (Chebotar, 2016), and commercial credit is traditionally considered an integral part of borrowed capital, which means that commercial credit is also part of corporate capital. The main role in borrowed capital is played by the capital received from banks, but when the conditions of a bank loan for a borrower worsen, it is replaced in corporate finance by a merchant and vice versa (Chen, Ma, & Wu, 2019).…”

Section: Resultsmentioning

confidence: 99%

Commercial Creditas An Element Of Corporate Finance

Startseva¹

2020

European Proceedings of Social and Behavioural Sciences

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“…As for an informal financing method, trade credit represents the second most essential source of external financing when there is a lack of bank credit (Danielson & Scott, 2004;Saiz et al, 2017). It can be regarded as a short-term financing source (Wu et al, 2012;Chen et al, 2019). It also indicates to the practice of customers financing their operations by deferring disbursements to suppliers (Cao et al, 2018).…”

Section: Debt Structurementioning

confidence: 99%

“…Following prior studies (e.g., Fisman & Love, 2003;Ge & Qiu, 2007;Lin & Chou, 2015;Zichao et al, 2018;McGuinness et al, 2018;Chen et al, 2019), the current study used the proxies of debt structure as independent variables in order to demonstrate their impact on the crash risk of firms listed in Egyptian Stock Exchange. Accordingly, the bank credit ratio symbolized by (X 1 ) is measured by the sum of Short-term bank loans and long-term bank loans divided by total assets.…”

Section: Debt Structurementioning

confidence: 99%

تأثیر هیکل الدیون على مخاطر إنهیار أسعار الأسهم المستقبلیة: أدلة من مصر( باللغة الإنجلیزیة)

السيد¹

2021

مجلة الاسکندریة للبحوث المحاسبیة

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The main objective of the study is to determine the extent impact of debt structure proxies on future stock price crash risk and its different measures in order to mitigate stock price crash risk and help investors to understand better crash risk consequences and modify their investing behavior. Additionally, it is a guide for regulators to better achieve the credit market and to create an intact credit protection system. The study was conducted on a sample of ( 13) firms representing (40.6%) of the total number of the real estate sector firms listed in the Egyptian Stock Exchange during the period from 2013 to 2019.The empirical results concluded that firms with high each of trade credit ratio, net trade credit ratio, trade credit to bank credit ratio, and debt structure characteristics have a lower stock price crash risk which was measured as negative conditional skewness of weekly returns, down-to-up volatility, and aggregate stock price crash risk. As for the control variables namely average weekly returns, financial leverage, and return on total assets were negatively significant for all three measures of stock price crash risk. Whilst, the firm size was a positively significant impact on stock price crash risk. While the study indicated that there was an insignificant impact of the bank credit ratio and the control variables namely investor heterogeneity, returns volatility, and market-to-book ratio on stock price crash risk measures in the future. The study also presented valuable recommendations to increase the different monitoring roles of the debt structure proxies in decreasing opportunistic behaviors and alleviating the likelihood of future stock price crash risk in Egypt which finally leads to rationalizing stakeholders' decisions.

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Bank credit and trade credit: Evidence from natural experiments

Cited by 97 publications

References 44 publications

Investor protection and cost of debt: Evidence from dividend commitment in firm bylaws

Investor protection and cost of debt: Evidence from dividend commitment in firm bylaws

Commercial Creditas An Element Of Corporate Finance

تأثیر هیکل الدیون على مخاطر إنهیار أسعار الأسهم المستقبلیة: أدلة من مصر( باللغة الإنجلیزیة)

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