Customer Information Disclosure and Collateral Loan: Evidence from Chinese Listed Companies

How supply chain information can help a company is given considerable attention by academic and practical circles. As boosting in the Chinese capital market, there is a higher demand for loans. Our study uses 2007-2017 Chinese listed company data to study whether information about major customers affecting the company's reliance on collateral loan, which reflects the incremental value for banks assessing credit risks. The results found that the detailed customer information disclosed by the company can send positive signals to the bank of a high-quality information environment and reduce its dependence on collateral loans. While customer concentration is one of the credit risk factors for banks, which increases the company's dependence on collateral loans instead. Further research found that a benign customer relationship can alleviate the risk effect brought by customer concentration.

Automated summary

The study found that detailed customer information disclosed by the company can reduce the dependence on collateral loans from banks, while customer concentration can increase this dependence. A positive customer relationship can alleviate the risk effect caused by customer concentration.