Download or read book Does Trade Credit Substitute Bank Credit Evidence From Firm Level Data written by Mr.Guido De Blasio and published by International Monetary Fund. This book was released on 2003-08-01 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Download or read book Does Trade Credit Substitute for Bank Credit Evidence from Firm Level Data written by Guido de Blasio and published by . This book was released on 2006 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Download or read book Trade Credit and Bank Credit written by Inessa Love and published by World Bank Publications. This book was released on 2005 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: "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.
Download or read book Trade credit financial intermediary development and industry growth written by Raymond Fisman and published by World Bank Publications. This book was released on 2001 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Download or read book Firms as Financial Intermediaries written by Vojislav Maksimovic and published by . This book was released on 2016 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: Trade credit can be an important complement to lending by financial intermediaries.Demirguc-Kunt and Maksimovic argue that nonfinancial firms act as intermediaries by channeling short-term funds from the financial institutions in an economy to their best use. Nonfinancial firms act in this way because they may have a comparative advantage in exploiting informal means of ensuring that borrowers repay.These considerations suggest that to optimally exploit their advantage in providing trade credit to some classes of borrowers, firms should obtain external financing from financial intermediaries and markets when this is efficient. Thus the existence of a large banking system is consistent with these considerations.Using firm-level data for 39 countries, the authors compute turnovers in payables and receivables and examine how they differ across financial systems. They find that the development level of a country's legal infrastructure and banking system predicts the use of trade credit. Firms' use of bank debt is higher relative to their use of trade credit in countries with efficient legal systems. But firms in countries with large, privately owned banking systems offer more financing to their customers and take more financing from them.The authors' findings suggest that trade credit is a complement to lending by financial intermediaries and should not be viewed by policymakers as a substitute.This paper - a product of Finance, Development Research Group - is part of a larger effort in the group to understand firm financing constraints. The authors may be contacted at [email protected] or [email protected].
Download or read book Trade Credit and the Effect of Macro Financial Shocks written by Mr.Yungsan Kim and published by International Monetary Fund. This book was released on 2003-06-01 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: Many studies examine why firms are financed by their suppliers, but few empirical studies look at the macroeconomic implications of such financial arrangements. Using disaggregated panel data, we examine how firms extend and use trade credit. We find that, controlling for the transactions or asset management motive, both accounts payable and receivable increase with tighter policy, implying that trade credit helps firms absorb the effect of a credit contraction. A comparison of S&P 500 firms with smaller firms, however, provides no evidence that when policy is tightened, large firms play the role of credit suppliers more actively than small firms.
Download or read book Is Trade Credit More Expensive than Bank Loans Evidence from Italian Firm Level Data written by Giuseppe Marotta and published by . This book was released on 2011 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: The study, aimed at evaluating the likely effects of the EC Directive on late payments, provides direct evidence that interfirm credit received by Italian manufacturing firms is, if ever, only slightly more expensive than bank loans. An econometric exercise shows that financial determinants have a stronger impact on recorded credit and debt periods for larger firms, able to use trade credit to smooth their cycle; smaller firms seem to adapt more passively to counterparties' supply and demand. A novel finding is that shorter credit periods are associated to the directly measured discount offered for quicker payments.
Download or read book Does Trade Credit Substitute for Bank Credit written by Guido De Blasio and published by . This book was released on 2004 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Trade Credit and Bank Credit written by Inessa Love and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Download or read book IS TRADE CREDIT MORE EXPENSIVE THAN BANK LOAN EVIDENCE FROM ITALIAN FIRM LEVEL DATA written by Giuseppe MAROTTA and published by . This book was released on 2001 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book When Trade Credit Facilitates Access to Bank Finance written by Eric Severin and published by . This book was released on 2004 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: While trade credit is traditionally considered as a substitute for bank loans, recent theoretical papers (e.g. Biais and Gollier (1997)) suggest that bank debt and trade credit can also be considered as two complementary sources of financing. By using US small businesses data (NSSBF 1998), this paper provides an empirical analysis of these hypotheses. The empirical findings are consistent with the hypothesis that trade credit helps firms to improve their reputation. The results show that trade credit can work as a signal about firm's quality and thus facilitates access to bank debt.Keywords: Bank, Trade credit, Informational asymetry.
Download or read book Aggregate Uncertainty and the Supply of Credit written by Mr.Fabian Valencia and published by International Monetary Fund. This book was released on 2013-12-02 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent studies show that uncertainty shocks have quantitatively important effects on the real economy. This paper examines one particular channel at work: the supply of credit. It presents a model in which a bank, even if managed by risk-neutral shareholders and subject to limited liability, can exhibit self-insurance, and thus loan supply contracts when uncertainty increases. This prediction is tested with the universe of U.S. commercial banks over the period 1984-2010. Identification of credit supply is achieved by looking at the differential response of banks according to their level of capitalization. Consistent with the theoretical predictions, increases in uncertainty reduce the supply of credit, more so for banks with lower levels of capitalization. These results are weaker for large banks, and are robust to controlling for the lending and capital channels of monetary policy, to different measures of uncertainty, and to breaking the dataset in subsamples. Quantitatively, uncertainty shocks are almost as important as monetary policy ones with regards to the effects on the supply of credit.
Download or read book Credit Supply and Productivity Growth written by Francesco Manaresi and published by International Monetary Fund. This book was released on 2019-05-17 with total page 75 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the impact of bank credit on firm productivity. We exploit a matched firm-bank database covering all the credit relationships of Italian corporations, together with a natural experiment, to measure idiosyncratic supply-side shocks to credit availability and to estimate a production model augmented with financial frictions. We find that a contraction in credit supply causes a reduction of firm TFP growth and also harms IT-adoption, innovation, exporting, and adoption of superior management practices, while a credit expansion has limited impact. Quantitatively, the credit contraction between 2007 and 2009 accounts for about a quarter of observed the decline in TFP.
Download or read book Does Trade Credit Facilitate Access to Bank Finance An Empirical Evidence from Portuguese and Spanish Small Medium Size Enterprises written by Ana Paula Matias Gama and published by . This book was released on 2013 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt: To assess the existence of credit rationing, we examine if trade credit is a substitute and/or a complement to bank credit. Using a data set of Portuguese and Spanish small and medium sized enterprises, and controlling for endogeneity problems by using GMM estimators, our results confirm the existence of credit rationing. This effect is particularly strong for firms that maintain an exclusive relationship with one bank, which indicate a greater severity of adverse selection problems for those firms. However, our results indicate that the substitution and complementary hypothesis are not mutually exclusive, especially for the younger and smaller firms.
Download or read book Does Trade Credit Facilitate Access to Bank Finance Empirical Evidence from Portuguese and Spanish Small Medium Size Enterprises written by Ana Paula Matias Gama and published by . This book was released on 2016 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines if trade credit is as a substitute and/or a complement to bank credit in order to assess the existence of credit rationing. Using a panel dataset of 468 and 7019 Portuguese and Spanish small medium size enterprises for the period 1998-2006, and controlling for endogeneity problems by using GMM estimators, the results confirm the existence of credit rationing, since the substitution hypothesis is confirmed. This effect is particularly strong for firms that maintaining an exclusive relationship with one bank, which indicate a greater severity of adverse selection problems for those firms. Although the substitution hypothesis is confirmed, the results also indicate that the substitution and complementary hypothesis are not mutually exclusive, especially for a specific group of firms: the younger and smaller firms. In line with the theories that emphasize the informational role of trade credit, due the informative advantage of suppliers, our empirical results confirm that trade credit allow the younger and smaller firms to improve their reputation, as trade credit reveals the private information of the supplier to the bank, in turn, banks can update their beliefs about customer default risk and agree to increase bank credit.
Download or read book When Do Trade Credit Discounts Matter Evidence from Italian Firm Level Data written by Giuseppe Marotta and published by . This book was released on 2008 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Italian firms are top users of trade credit in an international comparison. The paper offers some clues to the determinants of this stylised fact exploiting the answers of about 1900 manufacturing firms on a wide range of contractual features, separately for domestic and foreign customers. The main finding of the univariate analysis is that, with the almost totality of transactions made on credit, there is no evidence that this way of financing is more expensive than loans. An econometric investigation shows that discounts offered have the expected effect of reducing payment delays mostly for customers located abroad, where customary credit periods are shorter and creditors' rights protection is more effective. The result is consistent with the poor explanatory power of discounts received in regressions for the trade debt period of domestic firms.
Download or read book Additional Evidence on the Use of Trade Credit by Small Firms written by Morris G. Danielson and published by . This book was released on 2014 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper uses firm-level data from the 1995 Credit, Banks and Small Business Survey, conducted by the National Federation of Independent Business, to analyze the role of trade credit in the financing of small businesses. A unique attribute of this data set is that it can distinguish between the perceived importance of trade credit to a firm, and the percent of purchases the firm makes on credit. As in previous studies, we find that trade credit use is, at least partially, the result of credit rationing. We extend previous studies by giving a more in-depth analysis of the role played by trade credit discounts. Firms facing credit rationing are less likely to take trade credit discounts, suggesting that credit rationing imposes costs on a firm. Across the entire sample, though, firms that rank trade credit as an important source of funds take discounts as frequently as do other firms. In addition, those firms that have the most discounts available also take discounts more frequently than do other firms. These results suggest that small firms recognize the high cost of foregone discounts, and attempt to avoid these costs.
