Public data openness and trade credit: Evidence from China

Abstract

Exploiting the setting of public data openness in China, we demonstrate a significant trade credit provision increase following the data platforms’ introduction. Our mechanism tests confirm that the rise is driven by enhanced suppliers’ willingness and capability. We document that suppliers with more substantial incentives to offer trade credit before establishing the data platforms experience a more pronounced increase in trade credit usage. Additionally, we examine the economic consequences of public data openness, demonstrating that it not only strengthens supply chain financing but also generates spillover benefits. The impact of public data openness on trade credit provision extends to firm sales, productivity, and supply chain efficiency, resulting in significant increases in revenues and total factor productivity, and leading to significant decreases in interest expense ratio and receivable turnover days. Our results reveal that public data openness substantially improves financial conditions and fosters growth throughout the supply chain.