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An empirical analysis of the impact of trade credit on bank debt restructuring

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  • Antonio Fabio Forgione

    (University of Messina)

  • Carlo Migliardo

    (University of Messina)

Abstract

This paper analyzes the relationship between the likelihood that Italian firms implement bank debt restructuring and the trade credit. It uses a sample of 2377 Italian firms over the period of 2010–2014. The empirical analysis shows that the amount of payables and the unexpected delay in the payment of trade credit are strictly related to the firm’s financial distress. Specifically, the findings suggest that companies in financial distress have used trade credit extensively and suffer from the deferment of receivables. This result supports the hypothesis of a potential credit contagion channel in the supply chain with a cascading effect between buyers and suppliers.

Suggested Citation

  • Antonio Fabio Forgione & Carlo Migliardo, 2019. "An empirical analysis of the impact of trade credit on bank debt restructuring," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(2), pages 415-438, July.
    • Handle: RePEc:spr:epolit:v:36:y:2019:i:2:d:10.1007_s40888-018-0110-x
    DOI: 10.1007/s40888-018-0110-x
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    More about this item

    Keywords

    Bank lending; Corporate distress; Panel logit model; Trade credit;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing

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