The purpose of this paper is to study the influence of investor sentiment on the supply of trade credit, and further explores the difference of the effect of investor sentiment on the supply of trade credit in the environment of strong market competition and weak market competition.
The authors use panel estimation techniques to examine the impact of investor sentiment in the Chinese securities market on the supply of corporate trade credit.
This paper finds that investor sentiment has positive impact on trade credit through three channels of motivation, willingness and ability. At the same time, this paper finds that investor sentiment has stronger impact on enterprises in strong market competition than enterprises in weak market competition.
This paper expands the research on the influence of virtual economy on the real economy, analyzes the difference of the influence of investor sentiment on the supply of trade credit under different market competition conditions.
The paper perfects the mechanism of trade credit decision-making at this stage, and provides more evidence for the virtual economy to act on the real economy.
This paper provides a theoretical basis for the government functional departments to use the investor sentiment to play a positive role in trade credit to improve the market competition and guide the development of China’s capital market in the direction of rationalization and health.
In combination with market competition environment and industry characteristics, this paper investigates external irrational factors and studies how investor sentiment affects trade credit supply.
The authors thank the financial support from National Natural Science Foundation of China under Grant Nos 71872121 and 71402115. Postdoctoral Science Foundation of China under Grant Nos 2017T100156 and 2015M570227, and the Young Scholar Program of Tianjin University of Finance and Economics under Grant No. YQ1507.
Huang, H., Li, R. and Bai, Y. (2019), "Investor sentiment, market competition and trade credit supply", China Finance Review International, Vol. 9 No. 2, pp. 284-306. https://doi.org/10.1108/CFRI-07-2018-0060Download as .RIS
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