Abstract: This paper empirically tests the effect of trade credit on R&D investment of the listed companies and different effects form the property right nature and money policy two aspects based on the institutional background of Chinese credit market and the financing function of trade credit. This empirical study finds that: there is a significant positive correlation between trade credit and R&D investment, which does not change with the different property right nature and money policies; the effect of trade credit on R&D investment in private listed companies is more significant than that in state-owned listed companies; compared with the monetary easing period, the effect of trade credit on R&D investment has significant difference between the private listed companies and the state-owned listed companies in the monetary tightening period; trade credit has the biggest impact on R&D investment in the private listed companies in the monetary tightening period. The above conclusions have great significance to the technological innovation of enterprises in the transitional economy, especially to the development of the private economy.

Key words: trade credit, R&D investment, property right nature, monetary policy