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Abstract This paper investigates the relationship between trade credit and corporate R&D investments, and whether this relationship varies under different monetary policies. Our results show that trade credit improves corporate R&D investments through easing financial constraints of R&D investments, and this effect is stronger under tightened monetary policies. Further, stateowned enterprises are able to use trade credit to improve their R&D investments, especially under tightened monetary policies; however, these results are not found among private enterprises. This phenomenon may be due to the stronger power to obtain and control trade credit by stateowned enterprises. Our results reveal the relationships between trade credit and R&D investments under different monetary policies, emphasizes the importance of the ability to obtain and control trade credit, and provide a new method for companies who are facing financing constraints in R&D investments to solve their problems.
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| Fund:国家社会科学基金项目（16BJY017） |
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