Trade Credit and the Effect of Macro-Financial Shocks: Evidence from U.S. Panel Data
AbstractMany 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.
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Bibliographic InfoArticle provided by Cambridge University Press in its journal Journal of Financial and Quantitative Analysis.
Volume (Year): 40 (2005)
Issue (Month): 04 (December)
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Other versions of this item:
- Yungsan Kim & Woon Gyu Choi, 2003. "Trade Credit and the Effect of Macro-Financial Shocks: Evidence from U.S. Panel Data," IMF Working Papers 03/127, International Monetary Fund.
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