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Trade Credit or Bank Credit? – Lessons Learned from Hungarian Firms between 2010 and 2015


  • Dániel Havran

    (Corvinus University of Budapest)

  • Péter Kerényi

    (Corvinus University of Budapest)

  • Attila Víg

    (Corvinus University of Budapest)


This paper addresses the way in which trade credit was used by Hungarian firms in the period between 2010 and 2015. Relying on Burkart and Ellingsen’s (2004) theory of trade credit, we use panel data on 14,554 Hungarian firms (including 68 large corporations) to estimate the relationship of trade credit and short-term bank credit. Estimated on sub-samples broken down by profitability, our results only confirm a complementary relationship. We also examine the relationship separately for each category of firm size. We found a complementary relationship for small and microenterprises, whereas the results obtained for large corporations imply a substitution effect. In Hungary, in the period after 2013 accounts payable tended to be increased by financially constrained micro and medium-sized enterprises and mostly held steady by financially unconstrained firms.

Suggested Citation

  • Dániel Havran & Péter Kerényi & Attila Víg, 2017. "Trade Credit or Bank Credit? – Lessons Learned from Hungarian Firms between 2010 and 2015," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 16(4), pages 86-121.
  • Handle: RePEc:mnb:finrev:v:16:y:2017:i:4:p:86-121

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    References listed on IDEAS

    1. Spiros Bougheas & Simona Mateut & Paul Mizen, 2007. "The Inventory Channel of Trade Credit: Theory and Evidence," Working Papers 2007016, The University of Sheffield, Department of Economics, revised Oct 2007.
    2. Rose Cunningham, 2004. "Trade Credit and Credit Rationing in Canadian Firms," Staff Working Papers 04-49, Bank of Canada.
    3. Schwartz, Robert A., 1974. "An Economic Model of Trade Credit," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 9(4), pages 643-657, September.
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    Cited by:

    1. Ágnes Illés Belházy & Tamás Végsõ & Anikó Bódi-Schubert, 2018. "An Analysis of the Payment Habits of Hungarian Micro, Small and Medium-sized Enterprises – In Focus: Cash Usage," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 17(4), pages 53-94.

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    More about this item


    trade credit; financial constraints;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models


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