Foreign Direct Investment, Trade Credit, and Transmission of Global Liquidity Shocks: Evidence from Chinese Manufacturing Firms

• 成果类型: Article
• 署名作者: Lin, Shu; Ye, Haichun
• 署名单位: Chinese University of Hong Kong; Hong Kong Monetary Authority (HKMA)
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhx087
• 发表日期: 2018
• 页码: 206
• 关键词: exchange-rates; external wealth; monetary; POLICY; trilemma; GLOBALIZATION; liabilities; NATIONS; assets

摘要

We empirically explore a trade credit channel through which foreign direct investment (FDI) firms can propagate global liquidity shocks to the host country despite its tight controls on portfolio flows. In a large sample of Chinese manufacturing firms, we find robust evidence that FDI firms provide more trade credit than local firms during tight domestic credit periods and that a favorable global liquidity shock amplifies FDI firms' advantage in trade credit provision. Moreover, the differential responses of FDI and local firms are stronger in financially more dependent industries or in Chinese provinces with less financial depth.