Local Government Debt and Firm Trade Credit:From the Perspective of Risk Spillover along Supply Chain
The rapid expansion of local government debt has created a crowding-out effect on local credit resources.Previous studies have mainly focused on the formal credit markets,neglecting the possibility that when the credit supply under formal institutions cannot meet financing needs,companies may supplement liquidity through informal forms of trade credit supply.In fact,the scale of trade credit financing under informal systems has become the main alternative financing method for bank credit.The phenomenon that local government debt first squeezes credit resources and then forces enterprises to squeeze upstream and downstream trade credit,as well as its risk spillover issues,deserves our attention.This paper systematically examines the impact of local government debt on firm trade credit financing by embedding debt data of prefecture-level cities and micro-level data from listed companies from 2007 to 2018.It finds that the expansion of local government debt significantly increases the scale of trade credit financing from upstream suppliers by enterprises.Mechanism analysis shows that local government debt has squeezed local credit resources,leading to an increase in the demand of local companies for trade credit.The heterogeneity analysis shows that trade credit of state-owned enterprises(SOEs)and mature and volatile enterprises with stronger bargaining power is more significantly affected by the debt expansion.Further analysis shows that the increase in local government debt not only hurts the resilience and operational efficiency of the supply chain due to liquidity exploitation but also creates inter-regional spillover effects from high-debt areas to low-debt areas through supply chain channels.The logic verified in this paper that government credit exploits bank credit and thus drives enterprises to seek trade credit enriches research on the financial allocation effect of local government debt.It suggests that the expansion of local government debt not only exacerbates the financing constraints of local enterprises but also indirectly affects the financing constraints of upstream enterprises through the secondary distribution of trade credit.This paper has important implications for long-term mechanisms for preventing and resolving local debt risks,as well as establishing government debt management mechanisms that are compatible with high-quality development in the future.
local government debttrade creditsupply chainrisk spillover
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万方数据
