Does Trade Credit Provides Favorable Information to Banks? Evidence from Japan
AbstractThis paper examines whether trade credit as a credible signal about firmfs creditworthiness to banks facilitates provision of bank credit to the firms receiving trade credit. Using data on Japanese manufacturing firms over the period 1990-1995, we find that firms receiving trade credit are provided short-term credit by less-informed banks. Consequently, in the firms that have armfs-length relations with banks, trade credit plays an important role in mitigating asymmetric information problems between firms and banks, thereby facilitating extension of bank credit.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. 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.
Bibliographic InfoPaper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 09-22-Rev.
Length: 12 pages
Date of creation: Jul 2009
Date of revision: Feb 2010
Trade Credit; Bank Credit;
Find related papers by JEL classification:
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-04-17 (All new papers)
- NEP-BAN-2010-04-17 (Banking)
- NEP-CTA-2010-04-17 (Contract Theory & Applications)
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.:
- Nilsen, Jeffrey H, 2002.
"Trade Credit and the Bank Lending Channel,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 34(1), pages 226-53, February.
- Mitchell A. Petersen & Raghuram G. Rajan, .
"Trade Credit: Theories and Evidence,"
CRSP working papers
322, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
- Mateut, Simona & Spiros Bougheas & Paul Mizen, 2003.
"Trade Credit, Bank Lending and Monetary Policy Transmission,"
Royal Economic Society Annual Conference 2003
149, Royal Economic Society.
- Mateut, Simona & Bougheas, Spiros & Mizen, Paul, 2006. "Trade credit, bank lending and monetary policy transmission," European Economic Review, Elsevier, vol. 50(3), pages 603-629, April.
- Simona MATEUT & Spiros BOUGHEAS & Paul MIZEN, 2003. "Trade Credit, Bank Lending and Monetary Policy Transmission," Economics Working Papers ECO2003/02, European University Institute.
- Simona Mateut & Spiros Bougheas & Paul Mizen, . "Trade Credit, Bank Lending and Monetary Policy Transmission," Discussion Papers 05/01, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
- Biais, Bruno & Gollier, Christian, 1997. "Trade Credit and Credit Rationing," Review of Financial Studies, Society for Financial Studies, vol. 10(4), pages 903-37.
- Mariassunta Giannetti & Mike Burkart & Tore Ellingsen, 0.
"What You Sell Is What You Lend? Explaining Trade Credit Contracts,"
Review of Financial Studies,
Society for Financial Studies, vol. 24(4), pages 1261-1298.
- Burkart, Mike & Ellingsen, Tore & Giannetti, Mariassunta, 2004. "What You Sell is What You Lend? Explaining Trade Credit Contracts," CEPR Discussion Papers 4823, C.E.P.R. Discussion Papers.
- Takeo Hoshi & Anil Kashyap & David Scharfstein, 1989.
"Corporate structure, liquidity, and investment: evidence from Japanese industrial groups,"
Finance and Economics Discussion Series
82, Board of Governors of the Federal Reserve System (U.S.).
- Hoshi, Takeo & Kashyap, Anil & Scharfstein, David, 1991. "Corporate Structure, Liquidity, and Investment: Evidence from Japanese Industrial Groups," The Quarterly Journal of Economics, MIT Press, vol. 106(1), pages 33-60, February.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Atsuko SUZUKI).
If references are entirely missing, you can add them using this form.