IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v69y2024ipas1544612324011504.html
   My bibliography  Save this article

Impact of trade frictions on economic costs and financial risks

Author

Listed:
  • Pan, Zhifang
  • Qian, Zhenqiu
  • Cheng, Shihui

Abstract

This paper constructs a Difference in Differences (DiD) model using 2018 to 2022 as the study period and April 2018 as the time point of the outbreak of trade friction in order to assess the impact of trade friction on the economic cost and financial risk of enterprises. The findings suggest that increased trade friction leads to higher economic costs and financial risks for firms. Specifically, trade frictions may negatively affect firms' operations and financial position through increased market uncertainty, supply chain disruption risk, tariff cost pass-through, and impact on competitive strategies. In addition, inventory share and management expense ratio play a significant mediating effect in the impact of trade frictions on economic costs and financial risks. The findings of this paper provide important empirical evidence for understanding the mechanism of trade friction's impact on firms and provide valuable references for policy makers and firms.

Suggested Citation

  • Pan, Zhifang & Qian, Zhenqiu & Cheng, Shihui, 2024. "Impact of trade frictions on economic costs and financial risks," Finance Research Letters, Elsevier, vol. 69(PA).
    • Handle: RePEc:eee:finlet:v:69:y:2024:i:pa:s1544612324011504
    DOI: 10.1016/j.frl.2024.106121
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612324011504
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2024.106121?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:69:y:2024:i:pa:s1544612324011504. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.