The level of corporate risk taking and the secondary allocation of commercial credit: evidence from China
DOI:
https://doi.org/10.54691/bcpbm.v25i.1688Keywords:
Secondary allocation of commercial credit, Corporate risk-taking, Director's liability insurance, Supply chain financeAbstract
The liability insurance of directors and executives has been introduced into more and more companies, and the risk-taking level of the company has been improved, which has a great impact on the allocation of commercial credit. In a complex market, the mechanisms that act under different environmental conditions are different, and the secondary allocation of commercial credit leads to the extension of the supply chain of funds, which intensifies the financial risks of the supply chain. Therefore, it is of great significance to explore the relationship between the level of corporate risk-taking and the secondary allocation of commercial credit and the mechanism of action for preventing systemic financial risks in the supply chain and promoting stable economic development. This paper took China's listed companies from 2009 to 2020 as the example, and empirically examined the impact of the improvement of the company's risk-taking level on its secondary allocation of commercial credit. The research found that: First, companies took the initiative to re-allocate commercial credit for the purposes of maintaining customer relationships, maintaining the normal operation of the supply chain, and enhancing market status. Second, enterprises used the initiative to increase mortgage loans and bank loans as a mechanism intermediary, increased cash payments to upstream and downstream of the supply chain, and reduced company accounts payable to carry out secondary allocation of commercial credit. Third, in the further analysis of heterogeneity, it was found that this behavior of secondary allocation of commercial credit was more common in state-owned enterprises and more significant when external competition was strong. The findings of this paper showed that the higher the risk-taking level of companies that purchased D&O insurance, the more inclined they were to re-allocate commercial credit, which aggravated supply chain financial risks.
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