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Firms' resilience to financial constraints: The role of trade credit

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Listed:
  • Isaac Marcelin
  • Daniel Brink
  • Wei Sun

Abstract

We study the role of trade credit in enhancing the resilience of financially constrained firms from 2010 to 2017. Implicit borrowing in trade finance allows financially constrained firms to bridge the financing gap, expand employment by 8.26 per cent, and increase average firm profits significantly. Trade finance suppliers, not financially constrained firms, experience a surge of 7.99 per cent in the average rate of sales growth.

Suggested Citation

  • Isaac Marcelin & Daniel Brink & Wei Sun, 2021. "Firms' resilience to financial constraints: The role of trade credit," WIDER Working Paper Series wp-2021-78, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2021-78
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    References listed on IDEAS

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    Keywords

    Financial constraints; trade credit; Employment; Growth; Profitability; Corporate finance; Resilience;
    All these keywords.

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