Study On Product Market Competition And Corporate Business Credit Behavior

Commercial credit is an important behavior in the enterprise market behaviors,the provision and access of which is a part of enterprise strategic decision. theimportance of commercial credit is increasing and further study of Commercial creditis going on by researches.The market competitiveness of enterprises is a determining factor to the survivaland development of enterprise, while a robust capital chain is one of the mostimportant premises of insuring the market competitiveness of products. With theincreasingly deepening of our country market, How to survive and develop is anurgent strategic issue all enterprises faced. As a significant external source andoperating methods, commercial credit reflect market behavior of enterprises, at thesame time,as an important form of credit,whether to provide,the proportion and thenumber of commercial credit will be influenced by product market competition.Enterprise commercial credit should be an option of maximum enterprise value, but atpresent, there is lack of the research on the effects of product market competition onenterprise commercial credit behavior.As a mean of management and finance, commercial credit reflects the degree ofmarketization. the research on influence factor of commercial credit is of greatsignificance to expand the commercial credit scale,deepen the degree of marketeconomy and promote the development of Chinese economy. From the point ofcommercial credit’s increasingly importance to Chinese enterprises and the trend ofincreasing fierce competition Chinese enterprise faced, the research on the influenceof market competition on Chinese listing corporate’ commercial credit behavior andhow to use commercial credit to compet effectively while avoiding risk has greatpratical significance to accelerate the development using commercial credit inChinese mirco enterprises.This paper is a research on the enterprise commercial credit behavior from theperspective of product market competition, that is, the research on whethercommercial credit can be a strategy to enhance the product market competition.In the first part, the background a significance of research on product marketcompetition and commercial credit behavior will be analyzed and the idea and frameof this paper will be elaborated. The second part is reviews of foreign and domestic literature. In the foreignliterature part, the motivation of commercial credit, product market competition andthe relation of product market competition and commercial behavior will becontained. In the domestic part, I will summarize from two aspects of theory andempirical research. At last, foreign and domestic literature will be reviewed.In the third part, product market competition theory and metrics commonly usedat home and abroad will be generalized and the risk of commercial credit based onChinese reality will be analyzed. I will use the game theory to analyze the mechanismof the effect of product market competition on commercial credit behavior. I foundthat with the market share decrease, the commercial credit reduce but the commercialcredit provided increase.In the fourth part, I counted the commercial credit obtained and provided amongmanufacturing companies and found that mechanical equipment instrument industryobtain and provide commercial credit most.I also found that the textile and garmentfur industry acquire commercial credit least and the food and beverage industryprovide commercial credit least. There is a big difference between industries for thenet commercial credit obtained. The net commercial credit was negative,that is tosay,the commercial credit obtained was less than which provided in electronicindustry.The food and beverage industry get net commercial credit most.The fifth part is empirical research. Using five years’ data of Chinesemanufacturing enterprises to regress, I concluded that with the increase of marketshare, the commercial credit provided to downstream enterprises decrease. Which isconsistent with the result of the game model.This shows that enterprises which ownmarket competition advantage won’t provide more commercial credit in order toavoid financial risk and enterprises which is lack of market competition advantageprovide more commercial credit in order to gain market share in the fierce marketcompetition situation when the credit system of china is not sound. Which is meetedwith the hypothesis of the competition of commercial credit and Paul, etal ‘s(2007)conclusion, that is,under the fierce market competition environment, enterprises usecommercial credit to expand the customer base, enhance enterprises’ market share inorder to reinforce the advantage in the market competition situation. While thecommercial credit obtained of enterprises is proportional to the position of marketcompetition which enterprises at, which is consistent with the conclusion of the game model.In the sixth part, the empirical conclusions are arrived and macro and microsuggestions are given,at the same time, the defeats of the research are analyzed andthe future of research is prospected.