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In-Kind Finance: A Theory of Trade Credit Author info | Abstract | Publisher info | Download info | Related research | Statistics Mike Burkart
Tore Ellingsen
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It is typically less profitable for an opportunistic borrower to divert inputs than to divert cash. Therefore, suppliers may lend more liberally than banks. This simple argument is at the core of our contract theoretic model of trade credit in competitive markets. The model implies that trade credit and bank credit can be either complements or substitutes. Among other things, the model explains why trade credit has short maturity, why trade credit is more prevalent in less developed credit markets, and why accounts payable of large unrated firms are more countercyclical than those of small firms.
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Article provided by American Economic Association in its journal American Economic Review .
Volume (Year): 94 (2004)
Issue (Month): 3 (June)
Pages: 569-590
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Handle: RePEc:aea:aecrev:v:94:y:2004:i:3:p:569-590Contact details of provider: Email: Web page: http://www.aeaweb.org/aer/ More information through EDIRC
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"Are Trade Creditors Relationship Lenders? ,"
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Daniela Fabbri & Anna Maria Cristina Menichini, 2005.
"In kind finance, collateral and cheap trade credit ,"
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TSURUTA Daisuke, 2007.
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Rose Cunningham, 2004.
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Cunningham, Rose, 2005.
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Iichiro Uesugi & Guy M. Yamashiro, 2004.
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Tian Zhu & Lixin Colin Xu & Cull, Robert, 2007.
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