Topic: Weaponization of Trade Credit in Competitive Market: Evidence from the Paycheck Protection Program
Speaker: LI Xiong, University of Science and Technology of China
Time: December 18, 2025, 15:00
Venue: EMS 237
Abstract:
This paper examines whether firms adopted aggressive trade credit policies to expand market share during the COVID-19 pandemic. Exploiting the Paycheck Protection Program (PPP) as a plausibly exogenous liquidity shock, we implement a difference-in-differences design comparing PPP recipients and non-recipients from 2019 to 2021. We find that PPP recipients increased trade-credit provision by 1.4–2.1 percentage points relative to control firms, with no pre-trend. The expansion is concentrated among firms operating in highly competitive markets, with low pandemic exposure, and toward marginal customers with smaller size and weaker bargaining power. Consistent with aggressive liquidity redeployment, PPP recipients subsequently gained market share but at cost of short-term loss. The market-share gains stem from reduced supply-chain relationship disruptions and the acquisition of new customers. We further document significant spillover effects: rivals lost market share, while downstream customers modestly benefited. Overall, the findings suggest that public liquidity support not only stabilized firms but also reshaped product-market competition, as firms used aggressive trade-credit policies to reallocate demand and transmit liquidity along supply chains.
Speaker Profile:
LI Xiong is a Tenure-track Associate Professor at the School of Management and the School of Technology and Business, University of Science and Technology of China, where he also serves as a Master’s Supervisor. He earned his Ph.D. from the University of Hong Kong and was a visiting scholar at Washington University in St. Louis, USA. His primary research focuses on supply chain finance. Currently, several of his working papers are under review or in the revision stage at top-tier journals in the fields of finance and accounting, including The Accounting Review and Management Science (sole-authored).
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