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Is trade credit more expensive than bank loans? Evidence from Italian firm-level data

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Author Info
Giuseppe Marotta ()

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Abstract

The study, aimed at evaluating the likely effects of the EC Directive on late payments, provides direct evidence that interfirm credit received by Italian manufacturing firms is, if ever, only slightly more expensive than bank loans. An econometric exercise shows that financial determinants have a stronger impact on recorded credit and debt periods for larger firms, able to use trade credit to smooth their cycle; smaller firms seem to adapt more passively to counterparties' supply and demand. A novel finding is that shorter credit periods are associated to the directly measured discount offered for quicker payments.

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File URL: http://www.economia.unimore.it/marotta_giuseppe/murst/Tradecredit.pdf
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Publisher Info
Paper provided by Universita di Modena e Reggio Emilia, Dipartimento di Economia Politica in its series Heterogeneity and monetary policy with number 0103.

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Length: pages 35
Date of creation: Mar 2001
Date of revision:
Handle: RePEc:mod:modena:0103

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Web page: http://www.economia.unimore.it
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Related research
Keywords: Trade credit Late payments Credit rationing

Find related papers by JEL classification:
E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure

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.:

  1. Dietmar Harhoff & Timm Körting, 1998. "Lending Relationships in Germany: Empirical Results from Survey Data," CIG Working Papers FS IV 98-06, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG). [Downloadable!]
    Other versions:
  2. Gregory E. Elliehausen & John D. Wolken, 1993. "The demand for trade credit: an investigation of motives for trade credit use by small businesses," Staff Studies 165, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  3. Stephen G. Cecchetti, 1999. "Legal Structure, Financial Structure, and the Monetary Policy Transmission Mechanism," NBER Working Papers 7151, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Chee K. Ng & Janet Kiholm Smith & Richard L. Smith, 1999. "Evidence on the Determinants of Credit Terms Used in Interfirm Trade," Journal of Finance, American Finance Association, vol. 54(3), pages 1109-1129, 06. [Downloadable!] (restricted)
  5. Jaffee, Dwight & Stiglitz, Joseph, 1990. "Credit rationing," Handbook of Monetary Economics, in: B. M. Friedman & F. H. Hahn (ed.), Handbook of Monetary Economics, edition 1, volume 2, chapter 16, pages 837-888 Elsevier. [Downloadable!] (restricted)
  6. Kashyap, Anil K & Stein, Jeremy C & Wilcox, David W, 1993. "Monetary Policy and Credit Conditions: Evidence from the Composition of External Finance," American Economic Review, American Economic Association, vol. 83(1), pages 78-98, March. [Downloadable!] (restricted)
    Other versions:
  7. Petersen, Mitchell A & Rajan, Raghuram G, 1994. " The Benefits of Lending Relationships: Evidence from Small Business Data," Journal of Finance, American Finance Association, vol. 49(1), pages 3-37, March. [Downloadable!] (restricted)
  8. Petersen, Mitchell A & Rajan, Raghuram G, 1997. "Trade Credit: Theories and Evidence," Review of Financial Studies, Oxford University Press for Society for Financial Studies, vol. 10(3), pages 661-91.
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  9. Marotta, Giuseppe, 1997. "Does Trade Credit Redistribution Thwart Monetary Policy? Evidence from Italy," Applied Economics, Taylor and Francis Journals, vol. 29(12), pages 1619-29, December. [Downloadable!] (restricted)
    Other versions:
  10. Anil K. Kashyap & Jeremy C. Stein, 1997. "The role of banks in monetary policy: a survey with implications for the European Monetary Union," Economic Perspectives, Federal Reserve Bank of Chicago, issue Sep, pages 2-18. [Downloadable!]
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Cited by:
(explanations, 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.)

  1. Mike Burkart & Tore Ellingsen, 2004. "In-Kind Finance: A Theory of Trade Credit," American Economic Review, American Economic Association, vol. 94(3), pages 569-590, June. [Downloadable!] (restricted)
  2. Daniela Fabbri & Anna Maria Cristina Menichini, 2005. "In kind finance, collateral and cheap trade credit," CSEF Working Papers 146, Centre for Studies in Economics and Finance (CSEF), University of Salerno, Italy, revised 01 Mar 2006. [Downloadable!]
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