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The role of trade credit in the recent subprime financial crisis

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  • Yang, Xiaolou
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    Abstract

    This study tests firms' financing behavior, especially the causal relation between trade credit and bank credit around the time of the recent subprime financial crises. I find bank credit and accounts payable/receivable are simultaneously determined and there is a substitute/complementary effect between bank credit and accounts payable/receivable. Moreover, I test a cross-sectional response to crisis and find that firms with a more vulnerable financial position (i.e., financially constrained firms) are more likely to be negatively affected by crisis and, in turn, are more likely to cut their supply of credit to customers and increase their use of credit from suppliers.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Economics and Business.

    Volume (Year): 63 (2011)
    Issue (Month): 5 (September)
    Pages: 517-529

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    Handle: RePEc:eee:jebusi:v:63:y:2011:i:5:p:517-529

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    Web page: http://www.elsevier.com/locate/jeconbus

    Related research

    Keywords: Financial crisis Trade credit Bank credit;

    References

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    Cited by:
    1. Deng, Ziliang & Guo, Honglin & Zhang, Weifu & Wang, Chengqi, 2014. "Innovation and survival of exporters: A contingency perspective," International Business Review, Elsevier, vol. 23(2), pages 396-406.
    2. Mariarosaria Agostino & Francesco Trivieri, 2014. "Does trade credit play a signalling role? Some evidence from SMEs microdata," Small Business Economics, Springer, vol. 42(1), pages 131-151, January.

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