The barriers to informal financing: an examination of the influence of institutional distance on trade credit
研究发现，企业与客户所在国之间的制度距离越大，提供的商业信用越少；正式制度距离的影响比非正式制度距离更显著，且行业竞争激烈或出口目的地多样化可缓解这一负面效应。
Our research explores how the institutional distance between the focal firm and its customers’ countries or regions affects its trade credit decisions. The findings show that greater institutional distance leads to a reduction in trade credit provision, and the negative impact of formal institutional distance is more significant than that of informal institutional distance. Formal institutional distance reduces trade credit provision by increasing contract enforcement costs, and informal institutional distance reduces trade credit provision by raising bargaining and decision costs. The negative effect of institutional distance on trade credit provision is less pronounced when industry competition is intense or when firms have more diversified export destinations. Further analysis indicates that the negative effect can be mitigated when the focal firm makes higher relationship-specific investments or when there are strong diplomatic relations between the countries or regions involved. A deeper examination of the economic consequences stemming from reduced trade credit due to institutional distance reveals that it increases the likelihood of supply chain disruptions. Overall, our study offers a new perspective on how institutional distance influences a corporate's trust on its supply chain partners.