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In-kind finance: a theory of trade credit
Mike Burkart,Tore Ellingsen +1 more
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In this paper, the authors argue that it is typically less profitable for an opportunistic borrower to divert inputs than to divert cash, and that suppliers may lend more liberally than banks.Abstract:
It is typically less profitable for an opportunistic borrower to divert inputs than to divert cash. Therefore, suppliers may lend more liberally than banks. This simple argument is at the core of our contract theoretic model of trade credit in competitive markets. The model implies that trade credit and bank credit can be either complements or substitutes. Among other things, the model explains why trade credit has short maturity, why trade credit is more prevalent in less developed credit markets, and why accounts payable of large unrated firms are more countercyclical than those of small firms.read more
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Coal Companies’ Trade Credit Policy
TL;DR: In this article, the authors present issues related to the use of trade credit by coal companies during the 2014-2016 downturn and the upturn of 2017-2018 in the coal industry.
Effect of collateral floors on collateral setting in adverse selection credit markets
TL;DR: In this paper, the authors analyze the credit market using a model of asymmetric information and find that when borrowers tend to always switch to competitor lenders, a pure strategy equilibrium arises.
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Capital Insufficiencies, Absortion Role of Management Inefficiencies and Financial Distress (or Bankruptcy) Probabilities – A Panel Data Probit Analysis from European Western Countries
Oliveira Marques,Justino Manuel +1 more
TL;DR: In this article, the authors analyzed financial distress probability supported by two proxies defined by short and long term capital insufficiencies as dependent variables, namely, short term financing and trade credit risk taking associated with different coverage ratios.
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Wealth Inequality and the Political Economy of Financial and Labor Markets
Ronald Fischer,Diego Huerta +1 more
TL;DR: In this paper, the role of wealth inequality in the political process that determines financial and labor market regulations is examined, where political groups representing labor, small firms, and medium and large firms arise endogenously and have opposing interests with respect to institutional variables such as creditor and worker protection.
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Blockchain enabled technology platform for enhancing supply chain financing for SME’s
Karthik M,Shilpa Parkhi +1 more
TL;DR: This study studied and analyzed the possible synchronization between Blockchain technology and supply chain finance and presents a conceptual framework based on Blockchain technology to enhance the efficiency of supply chain financing for small and medium scale enterprises.
References
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Determinants of corporate borrowing
TL;DR: In this article, the authors predict that corporate borrowing is inversely related to the proportion of market value accounted for by real options and rationalize other aspects of corporate borrowing behavior, such as the practice of matching maturities of assets and debt liabilities.
Posted Content
What Do We Know About Capital Structure? Some Evidence from International Data
Raghuram G. Rajan,Raghuram G. Rajan,Raghuram G. Rajan,Luigi Zingales,Luigi Zingales,Luigi Zingales +5 more
TL;DR: In this paper, the authors investigate the determinants of capital structure choice by analyzing the financing decisions of public firms in the major industrialized countries and find that factors identified by previous studies as important in determining the cross-section of the capital structure in the U.S. affect firm leverage in other countries as well.
MonographDOI
Firms, contracts, and financial structure
TL;DR: In this article, a general model of the firm is developed, and then the financial structure of firms, debt collecting and bankruptcy is analyzed in greater depth, and the authors contribute to contact theory as developed in economic analysis.
Journal ArticleDOI
The Effect of Credit Market Competition on Lending Relationships
TL;DR: The authors showed that the extent of competition in credit markets is important in determining the value of lending relationships and that creditors are more likely to finance credit constrained firms when credit markets are concentrated because it is easier for these creditors to internalize the benefits of assisting the firms.
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A more complete conceptual framework for SME finance
TL;DR: In this article, the authors propose a more complete conceptual framework for analysis of SME credit availability issues, and emphasize a causal chain from policy to financial structures, which affect the feasibility and profitability of different lending technologies.