Shift in corporate financing strategies: The impact of targeted poverty alleviation on trade credit

This study examines the impact of corporate targeted poverty alleviation (TPA) initiatives on trade credit financing. We find that firms engaging in TPA activities experience a significant reduction in their reliance on trade credit. This effect is more pronounced for firms with higher operational risk, those located in regions with lower financial development, and those participating in TPA through industrial development projects. Mechanism analysis reveals that TPA participation enhances firms' access to bank loans and lowers financing cost, thereby reducing their dependence on trade credit. Our study contributes to the literature by demonstrating how government-initiated corporate social engagement shapes firms' financing strategies. It also provides practical insights for policymakers and firms, highlighting the government role in addressing the challenges in trade credit markets.