Trade credit, sovereign risk and monetary policy in Europe

Sáiz, María Cantero; Azofra, Sergio Sanfilippo; Olmo, Begoña Torre; Gutiérrez, Carlos López

doi:10.1016/j.iref.2017.09.010

Cited by 17 publications

(19 citation statements)

References 88 publications

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“…For the System-GMM regressions, this test is merely indicative of the strength of the instruments since consistency of the GMM estimates relies on the joint estimation of both the levels and the difference equations. Other articles also calculated the F-statistics to analyze the strength of the instruments for System-GMM estimations [92,94,95].…”

Section: Methodsmentioning

confidence: 99%

Sustainable Banking, Market Power, and Efficiency: Effects on Banks’ Profitability and Risk

2021

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The financial crisis seriously damaged the reputation of the banking sector, as well as its profitability and risk of insolvency, which led many banks to adopt a sustainable approach aimed at balancing long-term goals with short-term performance pressures. This article analyses how sustainable banking practices affect the profitability and the insolvency risk of banks. Moreover, we examine how sustainable strategies determine the effects of market power and efficiency on bank profitability. We used a two-step System-GMM to analyze an unbalanced panel of 1236 banks from 48 countries over the period 2015–2019. We found that sustainable banking practices increased profitability, and market power was an important determinant of profitability among conventional banks, but not among sustainable banks. Higher levels of cost scale efficiency led to greater profitability for both sustainable and conventional banks. However, there was no significant relationship between sustainable banking and insolvency risk. These results indicate that the traditional determinants of bank profitability are not relevant in explaining the superior profits of sustainable banks, which suggests the emergence of a new paradigm related to sustainability among the drivers of bank profitability.

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Section: Methodsmentioning

confidence: 99%

Sustainable Banking, Market Power, and Efficiency: Effects on Banks’ Profitability and Risk

2021

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“…We propose the following model based on the approach of previous articles to trade credit to analyze the relationship between creditor rights and the trade credit channel of monetary policy (Atanasova & Wilson, 2003;Cantero-Saiz et al, 2017;Kestens et al, 2012;Love et al, 2007).…”

Section: Econometric Model and Datamentioning

confidence: 99%

“…The relationship between inventory and trade credit receivables could therefore be positive. On the other hand, this relationship could also be negative because both inventories and accounts receivables are current assets, and thus, from an asset management perspective, are substitutes (Cantero-Saiz et al, 2017). Firms with larger inventories are more prone to receiving trade credit because, in the event of bankruptcy, the inventory can usually be liquidated easily (Taketa & Udell, 2007).…”

Section: Econometric Model and Datamentioning

confidence: 99%

Creditor rights, monetary policy, financial crisis, and trade credit

Cantero-Saiz

Torre-Olmo

Azofra

2021

BRQ Business Research Quarterly

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This article analyses how creditor rights affect the trade credit channel of monetary policy. We also aim to test whether these effects were conditioned by the global financial crisis of 2008. Using a sample of 15,356 firms from 29 countries (2001–2017), we found that in normal times or in countries not very severely affected by the financial crisis, trade credit receivables increase during monetary restrictions. Moreover, this increase is less pronounced as creditor protection strengthens. In countries strongly affected by the financial crisis, however, trade credit receivables do not react or even decrease after monetary expansions, regardless of the degree of creditor protection. Furthermore, the results of trade credit payables and net trade credit are not conclusive. JEL CLASSIFICATION: E52; K22; G32

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“…Among the determinants of the use of trade credit, the connection between trade credit supply and country risk was also noted. It turns out that in the pre-crisis period, commercial loans received increased when the state risk grew, while during the crisis, the supply of trade credit decreased along with the increase in the risk related to public debt [19]. Based on the empirical analysis of the impact of macroeconomic factors on late payments and arrears in the economy [20], it should be pointed out that in forecasting payment delays, it was particularly useful to observe the economic growth and monetary policy of the state, as these factors significantly affect the situation of enterprises, and therefore, also for late payment.…”

Section: Introductionmentioning

confidence: 99%

Trade Credit Management Strategies in SMEs and the COVID-19 Pandemic—A Case of Poland

Zimon

Dankiewicz

2020

Sustainability

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Every large or small enterprise needs to have financial liquidity and to be able to generate profits to develop. It is not important in which sector it operates, whether it is a private or public one, but profits and safety are two elements every enterprise is not able to function without. The low performance of these two measures can cause a number of difficulties for managers. To avoid this, leading companies, especially the smallest ones, should optimize the trade credit management policy. Most often, SMEs’ (small and medium-sized enterprises) owners try to work together as part of a group purchasing organization, which positively affects trade credit management. The aim of the paper is to present the trade credit management strategy in Polish group purchasing organizations during the COVID-19 pandemic. The study uses data on the construction sector because it is one of the most important segments of the Polish economy, which is financed to a large extent with trade credit. The paper indicates the mechanisms whose applications allowed SMEs operating in purchasing groups to change trade credit management strategies in such a way that these units could operate calmly and safely in the market. These changes could be observed in purchasing goods with a large reserve, strictly controlling all receivables, switching to cash sales or limiting sales on long-term trade credit. The analysis showed that enterprises changed trade credit management strategies from moderately conservative to highly conservative.

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Trade credit, sovereign risk and monetary policy in Europe

Cited by 17 publications

References 88 publications

Sustainable Banking, Market Power, and Efficiency: Effects on Banks’ Profitability and Risk

Sustainable Banking, Market Power, and Efficiency: Effects on Banks’ Profitability and Risk

Creditor rights, monetary policy, financial crisis, and trade credit

Trade Credit Management Strategies in SMEs and the COVID-19 Pandemic—A Case of Poland

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