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Does Trade Credit Affect Technical Efficiency? Empirical Evidence from Italian Manufacturing SMEs

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  • Mariarosaria Agostino
  • Francesco Trivieri

Abstract

Using firm‐level data from the Italian manufacturing sector, we investigate the relationship between small and medium‐sized firms technical efficiency and trade credit. Our contribution is twofold: we provide evidence on an open empirical question, and disentangle the channels through which trade credit may influence firms' efficiency. According to our findings, based on the Simar and Wilson (2007) procedure, trade credit seems to positively affect firm efficiency by mitigating financial constraints. Indeed, trade credit enhances efficiency especially for firms that are more likely to be financially constrained (i.e., smaller and/or younger firms) and during the most recent financial crisis.

Suggested Citation

  • Mariarosaria Agostino & Francesco Trivieri, 2019. "Does Trade Credit Affect Technical Efficiency? Empirical Evidence from Italian Manufacturing SMEs," Journal of Small Business Management, Taylor & Francis Journals, vol. 57(2), pages 576-592, April.
  • Handle: RePEc:taf:ujbmxx:v:57:y:2019:i:2:p:576-592
    DOI: 10.1111/jsbm.12410
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    Cited by:

    1. Chang, Kai & Long, Yu & Yang, Jiahui & Zhang, Huijia & Xue, Chenqi & Liu, Jianing, 2022. "Effects of subsidy and tax rebate policies on green firm research and development efficiency in China," Energy, Elsevier, vol. 258(C).
    2. Edson Mbedzi & Munacinga Simatele, 2022. "Lending Technologies, Firm Characteristics and Small Business Efficiency in South Africa," Economies, MDPI, vol. 10(11), pages 1-16, November.

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