Research On The Influence Of Public Debt On International Trade Credit Debt

In recent years,with the spread of COVID-19 and the rise of anti-globalization,the uncertainty of international trade has increased significantly,which makes the risk of trade credit assets of various countries also rise.This not only affects the trade choices of multinational enterprises,but also arouses the alarm of international financial institutions and widespread attention of government parties.At the same time,the global public debt is also affected by the economic slowdown and various extreme events,and the debt scale has risen sharply,which has not a small impact on the stability of the international exchange rate and the reasonable allocation of credit resources.As a result,the merchant account defaults of relevant traders are frequent,and the risk of international trade credit assets is further aggravated.As a big trading country,trade credit assets accounted for 23% of China’s exports by the end of 2020,and nearly a quarter of its exports have not been paid as promised,which is often caused by the delay of payment of trade credit debtors.And in recent years,the public debt of our important trading partner countries has also presented a sharply worsening trend.Therefore,in order to better explore the risk causes of international trade credit assets,this paper considers starting from the perspective of the debtor country of international trade credit,exploring whether its public debt will have an impact on international trade credit,and how the impact features and through what channel? So as to provide relevant suggestions for our trade credit management and the sustainable development of international trade.This paper takes debtor countries of international trade credit as the research object,and uses the research method combining theory and empirical analysis to explore the relationship between public debt and international trade credit.Firstly,this paper reviews domestic and foreign literatures on public debt and trade credit in order to provide support for this study.Secondly,this paper analyzes the relevant theories of public debt and trade credit,and puts forward the following hypotheses:(1)the rise of public debt will lead to the rise of international trade credit debt;(2)The effects of different levels of public debt on countries are different;(3)Public debt will affect the exchange rate and bank credit,which will indirectly affect the international trade credit debt through the commercial profit-seeking mechanism and credit restraint mechanism;(4)A high-level legal environment for business will restrain the impact of public debt on international trade credit debt.Finally,based on the panel time series data of 18 major trade credit debtors from 2007 to 2020,this paper uses the two-way fixed effect model to conduct a preliminary test on the impact of public debt on international trade credit debt under the premise of verifying the stability of the series,and analyzes the differences of the impact effects of samples with different debt levels through subsample regression.In order to test the dual-channel influence mechanism of public debt on international trade credit debt,this paper adopts stepstep regression method to introduce exchange rate and bank credit as intermediary variables into the model for testing.In addition,in order to further investigate the impact of the business rule of law environment on the baseline regression relationship,this paper also introduces the interaction term between the level of business rule of law and the level of public debt to test the moderating effect.The results show that:(1)the total effect of public debt on international trade credit debt is positive,indicating that the increase of public debt may lead to the increase of international trade credit debt.(2)The sub-sample regression results show that the public debt of countries with higher public debt has a stronger promoting effect on international trade credit debt,which may be because countries with higher public debt have a stronger crowding effect on social mobility,leading to a stronger motivation for enterprises to seek trade credit financing.(3)When exchange rate is introduced as an intermediary variable,the level of public debt is negatively correlated with the exchange rate,indicating that the expansion of public debt will lead to the depreciation of exchange rate,and the resulting capital flight will lead to the decline of international trade credit debt.(4)When bank credit is introduced as an intermediary variable,the level of public debt is negatively correlated with bank credit,indicating that the expansion of public debt will lead to bank credit contraction,and the resulting corporate credit constraints will promote the rise of trade credit debt.(5)The moderating effect analysis results show that the interaction term between the level of business rule of law and public debt is negatively correlated with trade credit debt,indicating that in countries with higher level of business rule of law,the government behavior is more constrained,thus inhibiting the promoting effect of public debt on trade credit debt.The main contributions of this paper are as follows: First,this paper provides a new research perspective for international trade credit.In view of the rising risks of trade credit assets of various countries in recent years,this paper does not directly analyze the quality of international trade credit and its risk characteristics,but explores the impact of public debt and its impact mechanism from the perspective of the debtor of international trade credit,so as to expand relevant research to the level of countries and debtors.Secondly,this paper provides new findings for the study of international trade credit.Existing literatures seldom pay attention to the impact of public debt on international trade credit.Based on theoretical analysis and empirical research,this paper finds that the rise of public debt may lead to the rise of international trade credit debt,and it also affects the level of international trade credit through exchange rate and bank credit,thus enriching relevant research results.