Does Trade Credit Substitute Bank Credit? Evidence from Firm-level Data

Blasio, Guido de

doi:10.1111/j.0391-5026.2005.00145.x

Cited by 101 publications

(69 citation statements)

References 38 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…The dependent variable, following Blasio (2005) is the ratio of the difference between debtors and creditors to total assets -trade credit (TC). To examine how the company i resorts the credit from suppliers when facing different values of banking financing in studied periods, we use the variable bank credit (BC) which has been proxied with the ratio of bank debt to total assets as an independent variable.…”

Section: Methodsmentioning

confidence: 99%

Does Trade Credit Facilitate Access to Bank Finance? Empirical Evidence from Portuguese and Spanish Small Medium Size Enterprises

Teixeira

2009

SSRN Journal

View full text Add to dashboard Cite

Resumo:O objectivo deste trabalho de investigação consiste em analisar se o crédito comercial obtido junto dos fornecedores e o endividamento bancário são considerados duas fontes de financiamento substitutas e/ou complementares. Usando uma amostra em dados painel de 468 e 7019 pequenas e médias empresas (PME) Portuguesas e Espanholas respectivamente, e recorrendo ao método de estimação GMM, para controlar potenciais problemas de endogeneidade, os resultados confirmam a hipótese de substituição, isto é, as empresas recorrem ao crédito junto dos fornecedores quando vêm restringido o seu acesso ao financiamento junto dos bancos. Este racionamento no acesso ao crédito bancário é particularmente relevante para as empresas que mantêm uma relação de monopólio (negoceiam com apenas um banco), o que indicia maiores problemas de selecção adversa e risco moral para estas empresas. Todavia, apesar de a hipótese de substituição ser confirmada, a evidência empírica aponta para o facto de que as hipóteses de substituição e complementaridade não serem mutuamente exclusivas, em particular para um grupo específico de empresas: as empresas mais jovens e mais pequenas. Em consonância com as teorias que enfatizam o conteúdo informativo veiculado pelo crédito comercial (qualidade da gestão, nível de risco do cliente), os resultados obtidos confirmam que o recurso ao crédito concedido pelos fornecedores ajuda as empresas mais jovens e mais pequenas a consolidarem a sua reputação no mercado de crédito. O montante de crédito comercial obtido pode ser visto como um sinal que veicula a informação privada detida pelo fornecedor aos bancos a baixo custo. Neste contexto, os bancos mostram-se mais predispostos a conceder crédito. Abstract:This paper examines if trade credit could be considered as a substitute and/or a complement to bank credit in order to assess the existence of credit rationing. Using a panel dataset of 468 and 7019 Portuguese and Spanish small medium size enterprises, in the period 1998-2006, and controlling for endogeneity problems by using GMM estimators, the results confirm the existence of credit rationing, since the substitution hypothesis is confirmed. This effect is particularly strong for firms that maintaining an exclusive relationship with one bank, which indicate a greater severity of adverse selection problems for those firms. Although the substitution hypothesis is confirmed, the results seem indicate that the substitution and complementary hypothesis are not mutually exclusive, especially for a specific group of firms: the younger and smaller firms. In line with the theories that emphasize the informational role of trade credit, due the informative advantage of suppliers, our empirical results confirm that trade credit allow the younger and smaller firms to improve their reputation, as trade credit reveals the private information of the supplier to the bank, in turn, banks can update their beliefs about customer default risk and agree to increase bank credit. JEL Classifications: G21, G24, G32

show abstract

Section: Methodsmentioning

confidence: 99%

Does Trade Credit Facilitate Access to Bank Finance? Empirical Evidence from Portuguese and Spanish Small Medium Size Enterprises

Teixeira

2009

SSRN Journal

View full text Add to dashboard Cite

show abstract

“…Secondly, even in developed financial markets, when monetary authorities are conducting a restrictive policy, the supply of external finance may decrease significantly, such that a sufficient allocation of funds to all demanding borrowers may no longer be possible, creating the need for alternative channels to finance growth. Several empirical studies have shown that firms substitute bank loans for trade credit in an effort to limit the impact of the traditional bank lending channel (Nilsen, 2002;De Blasio, 2005;Choi and Kim, 2005;Guariglia and Mateut, 2006) or, as shown in Figure 2, to limit the impact of a financial crisis (Love et al, 2007). .…”

Section: Implications Of Country Heterogeneitymentioning

confidence: 99%

Do firms use the trade credit channel to manage growth?

Ferrando

Mulier

2013

Journal of Banking & Finance

201

185

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. we show that also the overall conditions of the financial market matter for the importance of the trade credit channel for growth. Terms of use: Documents in

show abstract

“…In Italy, the weight of trade credit has been traditionally important (De Blasio, 2005;Marotta, 2005;De Socio, 2010;Agostino & Trivieri, 2013). Data used in this paper and described afterwards, indicate that trade credit accounts on average for 24.9% of firms' total liabilities.…”

Section: Introductionmentioning

confidence: 84%

Finance and R&D Investment: A Panel Study of Italian Manufacturing Firms

Succurro

Costanzo

2016

IJEF

View full text Add to dashboard Cite

The purpose of this study is to examine the role of different sources of finance on R&D investment decisions in Italian manufacturing firms. Accounting data, taken from the Aida database, are collected over the [2006][2007][2008][2009][2010][2011][2012][2013] years. The empirical evidence shows that the availability of external financing primarily affects the decision to engage in R&D activity rather than R&D intensity. Internal cash flow, on the contrary, does affect both the likelihood of whether firms will undertake any R&D and the size of R&D spending. This impact is strongly significant for financially weaker firms, SMEs and high-tech firms. Due to greater asymmetric information problems, small innovative firms mainly rely on cash-flow to finance innovative projects. Since bank loans and other forms of debt are not well suited for R&D-intensive activities, our study would contribute to the debate whether it might be socially desirable to incentivize alternative small business financing options, still limited in Italy.

show abstract

Does Trade Credit Substitute Bank Credit? Evidence from Firm-level Data

Cited by 101 publications

References 38 publications

Does Trade Credit Facilitate Access to Bank Finance? Empirical Evidence from Portuguese and Spanish Small Medium Size Enterprises

Does Trade Credit Facilitate Access to Bank Finance? Empirical Evidence from Portuguese and Spanish Small Medium Size Enterprises

Do firms use the trade credit channel to manage growth?

Finance and R&D Investment: A Panel Study of Italian Manufacturing Firms

Contact Info

Product

Resources

About