The Relationship Between Trade Credit And Loans
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The Relationship Between Trade Credit And Loans
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Author : Iichiro Uesugi
language : en
Publisher:
Release Date : 2008
The Relationship Between Trade Credit And Loans written by Iichiro Uesugi and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with categories.
Much of the existing literature on the relationship between trade credit and loans focuses solely on how a reduction in loans affects the use of trade credit. In this paper, we additionally investigate if a reduction in trade credit is offset by an increase in loans. Using a unique firm-level dataset of small Japanese businesses, we find the following: (1) as the lending attitude of financial institutions worsens, firms significantly decrease their use of trade credit, and (2) a reduction in trade credit, due to a decline in sales, leads to a reduction in the amount of loans extended. Our results provide evidence that small firms in Japan view trade credit and loans as complementary debt instruments. The primary implication of these findings is that bank-dependent small businesses may find their financing severely constrained in the event of major adverse shocks to real or financial activity.
Formal Finance And Trade Credit During China S Transition
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Author : Robert J. Cull
language : en
Publisher: World Bank Publications
Release Date : 2007
Formal Finance And Trade Credit During China S Transition written by Robert J. Cull and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with Access To Cred Bank categories.
Using a large panel dataset of Chinese industrial firms, the authors examine the determinants of access to loans from formal financial intermediaries and extension of trade credit. Poorly performing state-owned enterprises were more likely to redistribute credit to firms with less privileged access to loans through trade credit, a pattern consistent with some of the extension of trade credit being involuntary. By contrast, profitable private domestic firms were more likely to extend trade credit than unprofitable ones. Trade credit likely provided a substitute for loans for these private firms' customers that were shut out of formal credit markets. As biases in lending became less severe, the amount of trade credit extended by private firms declined.
Trade Credit Financial Intermediary Development And Industry Growth
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Author : Raymond Fisman
language : en
Publisher: World Bank Publications
Release Date : 2001
Trade Credit Financial Intermediary Development And Industry Growth written by Raymond Fisman and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2001 with Credit categories.
Where do firms turn for financing in countries with poorly developed financial markets? One source is trade credit. And where formal financial intermediaries are deficient, industries that rely more on this source of financing grow faster.
Does Trade Credit Substitute Bank Credit Evidence From Firm Level Data
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Author : Mr.Guido De Blasio
language : en
Publisher: International Monetary Fund
Release Date : 2003-08-01
Does Trade Credit Substitute Bank Credit Evidence From Firm Level Data written by Mr.Guido De Blasio and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003-08-01 with Business & Economics categories.
The paper examines micro data on Italian manufacturing firms' inventory behavior to test the Meltzer (1960) hypothesis according to which firms substitute trade credit for bank credit during periods of monetary tightening. It finds that their inventory investment is constrained by the availability of trade credit. As for the magnitude of the substitution effect, however, this study finds that it is not sizable. This is in line with the micro theories of trade credit and the evidence on actual firm practices, according to which credit terms display modest variations over time.
Trade Credit And Bank Credit
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Author : Inessa Love
language : en
Publisher: World Bank Publications
Release Date : 2005
Trade Credit And Bank Credit written by Inessa Love and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with Bank loans categories.
"The authors study the effect of financial crises on trade credit in a sample of 890 firms in six emerging economies. They find that although provision of trade credit increases right after the crisis, it consequently collapses in the following months and years. The authors observe that firms with weaker financial position (for example, high pre-crisis level of short-term debt and low cash stocks and cash flows) are more likely to reduce trade credit provided to their customers. This suggests that the decline in aggregate credit provision is driven by the reduction in the supply of trade credit, which follows the bank credit crunch. The results are consistent with the "redistribution view" of trade credit provision, in which bank credit is redistributed by way of trade credit by the firms with stronger financial position to the firms with weaker financial stand "--World Bank web site.
Customer Market Power And The Provision Of Trade Credit
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Author : Neeltje van Horen
language : en
Publisher: World Bank Publications
Release Date : 2007
Customer Market Power And The Provision Of Trade Credit written by Neeltje van Horen and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with Access to Finance categories.
Statistics show that the sale of goods on credit is widespread among firms even when they are capital constrained and thus face relatively high costs in providing trade credit. This study provides an explanation for this by arguing that customers who possess strong market power are able to increase their customer surplus by demanding to purchase the goods on credit. This gain in customer surplus increases with the degree of asymmetric information between buyer and seller with respect to product quality. Therefore, firms that are perceived as risky are especially subject to the market power of the customer and have to sell their goods on credit. Using detailed firm-level data from a large number of firms in Eastern Europe and Central Asia, this study finds evidence consistent with this hypothesis. It finds a strong positive correlation between customer market power and trade credit provision. Furthermore, this relationship is especially strong when the supplier is more risky and in countries with limited financial sector development or a weak legal system.
Market Power And The Matching Of Trade Credit Terms
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Author :
language : en
Publisher:
Release Date : 2008
Market Power And The Matching Of Trade Credit Terms written by and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with Credit categories.
"This paper studies the decision of firms to extend trade credit to customers and its relation with their financing decisions. The authors use a novel firm-level database of Chinese SMEs with unique information on market power in both output and input markets and on the amount, terms, and payment history of trade credit simultaneously extended to customers (accounts receivable) and received from suppliers (accounts payable). The analysis shows that suppliers with relatively weaker market power are more likely to extend trade credit and have a larger share of goods sold on credit. Examination of the importance of financial constraints reveals that access to bank financing and profitability are not significantly related to trade credit supply. Rather, firms that receive trade credit from their own suppliers are more likely to extend trade credit to their customers, and to "match maturity" between the contract terms of payables and receivables. This matching practice is more likely used when firms face strong competition in the product market (relative to their customers), and enjoy strong market power in the input market (relative to their suppliers). These results highlight the importance of supply chain financing for market competition and risk management in credit constrained firms."--World Bank web site.
Credit Chains And Sectoral Comovement Does The Use Of Trade Credit Amplify Sectoral Shocks
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Author : Claudio Raddatz
language : en
Publisher: World Bank Publications
Release Date : 2010
Credit Chains And Sectoral Comovement Does The Use Of Trade Credit Amplify Sectoral Shocks written by Claudio Raddatz and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with categories.
This paper provides evidence of the presence and relevance of the credit chain propagation and amplification mechanism described by Kiyotaki and Moore (1997) by looking at its implications for the correlation of industries. In particular, it tests the hypothesis that an increase in the use of trade credit, along the input-output chain linking two industries, results in an increase in their output correlation using detailed data on the correlations and input-output relations of 378 manufacturing industry pairs across 43 countries with different degrees of use of trade credit. The results provide strong support for this hypothesis and indicate that the mechanism is quantitatively relevant.
Trade Credit And Risk Management
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Author : Lucia Gibilaro
language : en
Publisher:
Release Date : 2018-12-18
Trade Credit And Risk Management written by Lucia Gibilaro and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018-12-18 with Asset-backed financing categories.
This book offers managers a complete analysis of the various issues of credit risk management for trade credit financing instruments supported by applications to various types of markets and presents an analysis on risks associated with trade credit in supply chains. Trade credit finance is characterized by strong attractiveness deriving from risk mitigation, but the plurality of sources of credit risk (default and dilution risk) requires the implementation of a credit risk management system that exploits the broad knowledge developed by financing supply relationships. Consequently, financiers could be hindered from developing a full understanding of the underwritten risks and are thus unable or only partially able to evaluate their full potential to expand financial relationships over the credit capability of a single counterparty with respect to the supplier-debtor pair. The richness of the information available in trade credit financing is not an obstacle for the development of a modern risk management framework, but it must be calibrated to avoid distortions in the implementation. In addition, risk analysis in the supply chain is not limited to the crises of individual members but must assess the effects of such crisis on the entire supply chain and assess the specific risks of contagion and the favorable conditions for the propagation. This book offers managers a complete analysis of the various issues of credit risk management for trade credit financing instruments supported by applications to various types of markets and presents an analysis on risks associated with trade credit in supply chains.
The Oxford Handbook Of Entrepreneurial Finance
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Author : Douglas Cumming
language : en
Publisher: OUP USA
Release Date : 2012-03-22
The Oxford Handbook Of Entrepreneurial Finance written by Douglas Cumming and has been published by OUP USA this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-03-22 with Business & Economics categories.
Provides a comprehensive picture of issues dealing with different sources of entrepreneurial finance and different issues with financing entrepreneurs. The Handbook comprises contributions from 48 authors based in 12 different countries.