Climate change risk and corporate trade credit financing

This study uses unbalanced panel data from Chinese listed companies between 2007 and 2023 and employs a dual fixed-effects model to examine the impact of climate change risk (CCR) on corporate trade credit financing (TCF). The analysis indicates that CCR significantly promotes corporate TCF through primary mechanisms including elevated debt financing costs, enhanced precautionary motives, and incremental information effects. A heterogeneity analysis reveals that this promotional effect is more pronounced in low-competition industries, regions with higher green-finance development levels, and firms characterized by high environmental, social and governance (ESG) ratings, low pollution attributes, strong market power, and non-state ownership. Further analysis indicates that physical risks (PR) inhibit TCF by weakening corporate profitability and cash flow stability, whereas transition risks (TR) exhibit a more pronounced promotional effect by incentivizing increased R&D investment and digital transformation. The economic consequence analysis indicates that TCF expansion driven by CCR enhancing their market value. This study systematically uncovers the buffering function of TCF in firms’ CCR responses and reveals the ‘dual effect’ of CCR, deepened our theoretical understanding of CCR and corporate TCF.