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Investment in trade credit in small business start-ups: evidence from Spain during a financial crisis

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  • Sonia Baños-Caballero
  • Pedro J. García-Teruel

Abstract

This study analyses start-up firms’ investment in trade credit during the period 2011–2014. We find that new or recently created firms had greater investments in trade credit than established firms. Moreover, the results indicate that start-up firms’ investment in trade credit did not depend on their bargaining power or access to external finance. These findings suggest that the reason start-ups invested more in accounts receivable than established firms could be due to late payments or their granting credit to low-quality customers who cannot obtain credit from established firms.

Suggested Citation

  • Sonia Baños-Caballero & Pedro J. García-Teruel, 2023. "Investment in trade credit in small business start-ups: evidence from Spain during a financial crisis," Applied Economics, Taylor & Francis Journals, vol. 55(3), pages 273-282, January.
    • Handle: RePEc:taf:applec:v:55:y:2023:i:3:p:273-282
    DOI: 10.1080/00036846.2022.2086685
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