Inherited trust and informal finance

Xu, Jiaman ORCID: https://orcid.org/0000-0002-3969-0841, Chen, Jiandong, Jiang, Mengfei and An, Jiafu 2024. Inherited trust and informal finance. Journal of Business Finance & Accounting 51 (1-2) , pp. 334-362. 10.1111/jbfa.12694

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Abstract

This paper examines the impact of trust on informal financial development. We isolate the inherited component of trust for 19 countries using US census data and relate it to firms’ access to trade credit. We discover that trust disproportionately elevates the use of trade credit by companies that face obstacles to obtaining funds from formal channels. Further analyses show that the effect is more pronounced in finance-dependent industries and that better access to trade credit promotes sales growth. Our results are robust to alternative samples, different estimations of inherited trust and various model specifications.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Publisher:	Wiley
ISSN:	0306-686X
Date of Acceptance:	23 February 2023
Last Modified:	13 Dec 2024 10:00
URI:	https://orca.cardiff.ac.uk/id/eprint/174583

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