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Can economic policy uncertainty reduce a firm's trade credit?

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  • Kun Su
  • Dongmin Kong
  • Ji Wu

Abstract

We examine how economic policy uncertainty (EPU) impacts on Chinese firm's trade credit. We find a significant negative relationship between EPU and both firm's account payable (receiving) and account receivable (offering). These results were more pronounced for non‐state‐owned enterprises, firms located in high marketization and high trust regions, and survived after the endogeneity tests.

Suggested Citation

  • Kun Su & Dongmin Kong & Ji Wu, 2021. "Can economic policy uncertainty reduce a firm's trade credit?," International Review of Finance, International Review of Finance Ltd., vol. 21(3), pages 1089-1099, September.
    • Handle: RePEc:bla:irvfin:v:21:y:2021:i:3:p:1089-1099
    DOI: 10.1111/irfi.12311
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    Cited by:

    1. Gnangnon, Sèna Kimm, 2022. "Duration of WTO Membership and Investment-Oriented Remittances Flows," EconStor Preprints 251274, ZBW - Leibniz Information Centre for Economics.
    2. Sèna Kimm Gnangnon, 2022. "Aid for Trade is more effective when the trading environment is more predictable," Economic Affairs, Wiley Blackwell, vol. 42(3), pages 453-476, October.
    3. Wang, Xinya, 2024. "Extreme risk spillovers in RMB exchange rates: The role of categorical economic policy uncertainties," International Review of Economics & Finance, Elsevier, vol. 94(C).
    4. Wei Jiang & Ling Yang & Tao Wang & John McCollough, 2024. "Research on the Impact of Trade Policy Uncertainty on the Digital Transformation of Chinese Export Firms," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 14(5), pages 1-11.
    5. Vo, Hong & Phan, Anh & Trinh, Quoc-Dat & Vu, Linh Nhat, 2022. "Does economic policy uncertainty affect trade credit and firm value in Korea? A comparison of chaebol vs. non-chaebol firms," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 474-491.
    6. Le, Anh-Tuan & Doan, Anh-Tuan & Phan, Thu, 2021. "Institutional development and firm risk from a dynamic perspective: Does ownership structure matter?," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 342-357.
    7. Tabash, Mosab I. & Farooq, Umar & Ashfaq, Khurram & Tiwari, Aviral Kumar, 2022. "Economic policy uncertainty and financing structure: A new panel data evidence from selected Asian economies," Research in International Business and Finance, Elsevier, vol. 60(C).
    8. Gnangnon, Sèna Kimm, 2023. "Duration of membership in the world trade organization and investment-oriented remittances inflows," The Quarterly Review of Economics and Finance, Elsevier, vol. 88(C), pages 258-277.
    9. Huizheng Liu & Jingyi Zhang & Qi Han & Wenshen Pan & Muhammad Afaq Haider Jafri, 2022. "Impact of Economic Policy Uncertainty on the Stability of Enterprises Embedded in a Global Value Chain," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 12(2), pages 1-3.
    10. Hao Ding, 2025. "Origin matters: Privatization of state‐owned enterprises and family business internationalization," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 33(1), pages 3-27, January.
    11. Nguyen, Duc Nguyen & Nguyen, Canh Phuc & Dang, Le Phuong Xuan, 2022. "Uncertainty and corporate default risk: Novel evidence from emerging markets," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 78(C).

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