The impact of government arrears clearance on the private enterprises resilience: A quasi-natural experiment based on special supervision

ABSTRACT Enterprise resilience reflects the ability of enterprises to grow against the trend and turn crisis into safety. In the face of the complex and volatile internal and external economic environment, enhancing the resilience of private enterprises is the necessary foundation for the sustainable development of China's economy and an important guarantee for the high-quality development of China's economy. This paper utilizes the 2016 State Council special supervision policy arrears clearance pilot policy as a quasi-natural experiment, and takes A-share private listed companies from 2010 to 2022 as the research sample, and uses the double-difference method to examine the impact of government arrears clearance on the resilience of private enterprises and its mechanism of action. The study finds that government arrears clearance helps to enhance the resilience level of private enterprises in supervised areas. The mechanism of action lies in the fact that the special supervisory action enhances private enterprise resilience by alleviating liquidity constraints and strengthening business credit. Further, the above effect is more significant among private enterprises with stronger financing constraints, intense industry competition and poorer regional legal and institutional environments. This study clarifies the microeconomic effects of the governance of local government arrears from the perspective of enterprise resilience, which is important for the government to strengthen macro-control to effectively promote the smooth development of the private economy.