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Assets Scale, Financing Channel and Commercial Credit Supply |
WANG Ming hu1,XI Yan qun3 |
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Abstract Current literature draw contradictive conclusions on the effect of assets scale to commercial credit supply, which indicates a necessity for further research. In this article, we use mathematic model and empirical test to analyze the effect of financing channel on commercial credit supply under different assets scales. We find that before reaching a certain scale, due to their inferior position in the commercial market, small and median enterprises (SMEs) must provide a great deal of commercial credit to maintain their survival and growth. Owing to credit discrimination of our financial system to SMEs, SMEs obtain less bank credit than large companies, thus they need more commercial credit financing. With the increasing of commercial credit financing, the rise of financing cost leads to the gradual decline of commercial credit supply. After achieving a certain scale, banks give more credit to the firm, the firm can substitute bank credit for commercial credit at a higher cost, and this
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Received: 06 August 2012
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Corresponding Authors:
WANG Ming hu
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