Credit Financing, Financing Constraints and Enterprise Investment Efficiency: A Comparative Study of Manufacturing Enterprises in China and India
نویسندگان
چکیده
At present, there is no consensus in the literature concerning the influence of different credit financing on investment efficiency of enterprises, especially the lack of empirical evidence in developing countries. In this paper, based on the World Bank enterprise survey data, using the Heckman sample selection model, we study the effects of bank credit and trade credit on investment efficiency of manufacturing enterprises in China and India. The results show that in China, trade credit has a significant positive effect on investment efficiency of manufacturing enterprises. In contrast, bank credit has a significant negative effect. In India, trade credit can also improve the investment efficiency of manufacturing enterprises, but bank credit had no significant effect. From the point of view of the degree of financing constraints, the effects of bank credit and trade credit also have significant differences. In China, regardless of the financing constraint condition faced by the enterprises, trade credit improves the investment efficiency significantly. Bank credit, however, reduces the investment efficiency of weak financing constraint enterprises on the one hand, while on the other improves the investment efficiency of strong financing constraint enterprises. In India, both bank credit and trade credit have no significant effect on investment efficiency of weak financing constraint enterprises, but trade credit has a significant positive effect on the investment efficiency of strong financing constraint enterprises. In conclusion, this paper shows that trade credit can play a greater role in promoting the investment efficiency of manufacturing enterprises in developing countries.
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