The Sino-U.S. trade war: Challenges for trade credit financing and the role of corporate culture

Abstract

This research demonstrates that the Sino-U.S. trade war decreases the acquisition of trade credit of the firms exposed to risk in trade with the U.S., and a strong corporate culture can mitigate the adverse effects of the Sino-U.S. trade war outbreak on Chinese firms. We also find that a strong corporate culture can help enhance firms' innovation and transparency, boosting product competitiveness and upstream suppliers' trust. These effects are more pronounced in non-state-owned enterprises. We show that international trading conflict hurts the financing of Chinese enterprises, and well-established informal institutions can mitigate these adverse effects.