The hypothesis that companies substitute trade credit for bank credit during period of restricted monetary policy has been subject of empirical investigation for the reasons that it helps us to understand the linkages between the financial sector and real sector of economy. This paper examines whether companies in India substitute trade credit for bank credit during restricted monetary policy years. Using panel data econometric method the study uses time-series cross-section company level data of 828 manufacturing companies covering period from 1990 to 2001. The findings suggest that the magnitude of substitution of trade credit for bank credit is statistically significant during the monetary restrictive years. These results assume significance as about 40 per cent and 30 per cent of current assts constitute the trade credit and bank credit respectively. Both these put together is about 35 per cent of total asset of sample companies in India. The results also suggest that magnitude of substitution vary depending on the size of company.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Indian Institute of Management Ahmedabad, Research and Publication Department in its series IIMA Working Papers with number
2004-05-08.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Did you know? You can create a compilation of all publications of a group of people, say alumni of a program, your students or memers of an association.