Dissertation > Economic > Economics > Branch of science in Economics > Industrial Economics

A Research on How Market Concentration Affects the Commercial Credit on Industries and Companies in China

Author LiuZhiHua
Tutor YangZhaoJun
School Hunan University
Course Industrial Economics
Keywords commercial credit credit risk industry concentration HHI market share
CLC F062.9
Type Master's thesis
Year 2009
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Harvard School of Theory of Industrial organization view market structure as the factor that determines market conduct and the latter determines market performance. Commercial credit is an important market conduct involved in financing and operations. However, researchers focusing on market structure’s impact on commercial credit are few so far. The paper targets on a crucial index of marketstructure - market concentration, and its influence on the commercial creditbehavior of listed companies in China.The main ideas of this article include:1. The impact of market concentration on commercial credit. By using a static game model, this article analysis that a feasible strategy to enlarge revenue for enterprises with high competitive power under China’s severe credit crisis.2. A current situation of China’s listed companies’ commercial credit. This paper shows that the overall situation of China’s listed companies in obtaining and providing commercial credit in recent years. The research shows that commercial credit has been adopted by increasing enterprises as a way to finance or a means to compete with the development of China’s Market-oriented economy. Through the evolution of listed companies’ commercial credit, different industries have shown different characters in industry’s net rate of commercial credit and the capacity of commercial credit.3. An empirical analysis on the influence of market concentration towards industry commercial credit behavior. Regression analysis output shows that the net rate of commercial credit in all industries increase along with the enhancement in market concentration, with the use of Herfindanl-Hirschman index showing the concentration of the industry. However, market concentration of industries shows no obvious features in the capacity of commercial credit.4. An empirical analysis on how market concentration affects industry commercial credit. The use of Herfindanl-Hirschman index and the company’s market share deputy respectively implicates the entire situation of industries’ market concentration and companies’ competitive position in the line. Also it shows how market concentration affects commercial credit. The result of linear regression shows that China’s listed companies’ net rate of commercial credit increases with the enhancement of industry market concentration. The role that enterprise’s market share plays a greater than that of the entire industry Herfindanl-Hirschman index.This paper shows that the Chinese listed companies in various industries are affected by market concentration. However, the conduct of commercial credit in each company is relatively much affected by the company’s specific location in market structure. Nevertheless, it reflects the market structure characteristic of the whole industry. Therefore, useful ways for Chinese listed companies to make full use of commercial credit lies in two elements. On the one hand, companies should try their best to gain a favorable position in the market; On the other hand, China should adjust the industrial structure of each industry in institutional aspects. In this way, the principal body of market competition - the company - can be posed in a relatively balanced position in the market.

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