Second, China lacks well-developed financial market. Chan et al. (2007) indicate that China is a bank-based economy despite its rapid development of two stock exchanges that enable Chinese firms to raise external funds. As a result, rapidly growing Chinese firms have to rely on informal financing channels rather than formal financial institutions (Allen, Jun, & Meijun, 2005). During the financial crisis, the Chinese firms provide us an interesting opportunity to examine the trade credit policy. In this paper, we examine the relation between trade credit and bank credit before, during, and after the crisis.