Trade Credit, the Financial Crisis, and SME Access to Finance

Abstract

Mounting evidence indicates that firms, particularly SMEs, suffered from a significant credit crunch during this crisis. We analyze for the first time whether trade credit provided an alternative source of external finance to SMEs during the crisis. Using firm‐level Spanish data we find that credit constrained SMEs depend on trade credit, but not bank loans, and that the intensity of this dependence increased during the financial crisis. Unconstrained firms, in contrast, are dependent on bank loans but not on trade credit.

A long-run survival analysis of corporate liquidations in Ireland

“…Other studies emphasise the role of nonbank forms of financing. Carbo-Valverde et al (2013) analyse a panel of over 40,000 Spanish SMEs from 1994 to 2008. They find that credit constrained SMEs depend on trade credit rather than bank loans to finance capital expenditures, particularly when financing constraints are tighter.…”

Do SMEs Benefit from Unconventional Monetary Policy and How? Microevidence from the Eurozone

“…Another strategy is to examine the substitution between bank loans and capital market instruments such as commercial paper (e.g., Kashyap, Stein, and Wilcox ) or corporate bonds (Becker and Ivashina )—a strategy, however, that can only be applied to firms that have access to public debt markets. Some papers estimate demand and supply equations using data that includes firm‐level characteristics in a disequilibrium model that identifies credit‐constrained borrowers (e.g., Kremp and Sevestre , Carbo‐Valverde, Rodriguez‐Fernandez, and Udell ). Another alternative is to exploit credit registry data in countries where firms routinely obtain credit from multiple banks.…”

The Home Bias and the Credit Crunch: A Regional Perspective

“…). Another approach is to apply a disequilibrium model to identify credit‐constrained firms (Kremp and Sevestre , Carbò‐Valverde, Rodriguez‐Fernandez, and Udell ). An alternative approach to identify constrained firms, which we will follow in this paper, is to use survey data that contain information on loan applications and bank decisions (Puri, Rocholl, and Steffen , Popov and Udell ).…”