Rent Extraction or Collaborative Financing? Digital Spillovers of Major Customers on Supplier Trade Credit Scale and Quality

Does the digital transformation of major customers foster collaborative financing for upstream suppliers, or does it amplify their bargaining power for rent extraction? This study investigates these competing hypotheses by examining the digital spillovers from major customers to supplier trade credit. Using a unique hand-collected dataset linking Chinese listed suppliers with their top five customers by accounts receivable from 2010 to 2021, we document a “dual enhancement effect”: major customer digitalization significantly increases trade credit scale and improves trade credit quality, effectively rejecting the rent extraction hypothesis. Specifically, trade credit quality is reflected in lower bad debt provision ratios, shorter receivable aging, and lower material default risk. Mechanism tests suggest that improved information transparency and stronger customer market competitiveness are important channels through which digitalization affects supplier trade credit. Cross-sectional analyses show that these effects are more pronounced for non-state-owned or low-asset-specificity suppliers, and for customers with higher asset specificity or lower importance. After ruling out alternative explanations, we further find that this digital spillover strengthens supply chain resilience. Overall, the evidence is more consistent with the collaborative financing view than with the rent extraction view, suggesting that major customer digitalization may help foster more sustainable and cooperative financing relationships within supply chains.