Social credit system reform and trade credit financing

The construction of social credit system is a key step in building a modern economic system. Based on the quasi-natural experiment of social credit system reform, this paper explores the impact of social credit system construction on trade credit. The results show that social credit system reform can reduce information asymmetry and increae the cost of dishonesty, thereby significantly increasing trade credit. Cross-sectional results reveal that the impact of social credit system reform on trade credit is more pronounced in firms with less supply chain resilience, lower centrality of supply chain networks, and weaker internal and external governance, and firms located in regions with less developed formal institutions. This paper deepens the understanding of the effects of social credit system reform from the perspective of informal financing, which has significant practical implications for fully utilising the fundamental role of social credit in high-quality economic development.