Curbing Shocks to Corporate Liquidity: The Role of Trade Credit

Abstract

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Funding Liquidity without Banks: Evidence from a Shock to the Cost of Very Short‐Term Debt

“…Amberg et al. (), for example, use the failure of Panaxia—a Swedish cash‐in‐transit firm—as a plausibly exogenous shock to liquidity demand for firms exposed to the failure. They find that this shock leads to an increase in the use of trade credit and a decline in firms’ cash balances.…”

Funding Liquidity without Banks: Evidence from a Shock to the Cost of Very Short-Term Debt

“…More recent papers, in contrast, attempt to identify one side or the other. Amberg et al (2016), for example, use the failure of Panaxia -a Swedish cash-in-transit firm -as a plausibly exogenous shock to liquidity demand for firms exposed to the failure. They find that 6 this shock leads to increases in the use of trade credit and declines in firms' cash balances.…”