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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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Selling Strategy Selection Considering Both the Way of Payment and Inventory Limitation
Jiao Wang,Ruiqing Zhao,Gaoji Sun +2 more
TL;DR: In this paper, the authors compared four selling strategies: (i) cash sale without inventory limitation, (ii), cash sale with inventory limitation (iii), credit sale without, and (iv) credit sale with, and showed that credit sale always dominates cash sale as long as the inventory level settings are the same.
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The Firm’s Trade Credit Policy Effects on Debt and Capital Structure under Trade-Off and Pecking Order Predictions – A Panel Data Static Model Analysis, from European Western Countries
Oliveira Marques,Justino Manuel +1 more
TL;DR: In this article, the conditions under which a firm's both book leverage and capital structure may be explained with the scholar explanatory variable sets constituted by financing, profitability and return volatilities are analyzed.
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Common delivery or fast delivery: optimal pricing decisions of online retailers with rebate policy
TL;DR: Wang et al. as mentioned in this paper examined and compared the pricing strategies and profits under different strategies to show some managerial insights for the retailer's decision-making, and found that when the cost of fast delivery is not very high, improving the level of delivery would bring more profit to the retailer.
Trade Credit and Firm Efficiency: Evidence from Chinese Manufacturing Firms
TL;DR: In this article , the impact of trade credit financing on firm efficiency exploiting a sample of Chinese manufacturing listed firms for the period 2004 to 2018 is investigated. And the authors reveal three economic mechanisms underlying their baseline findings: alleviating financial constraints, mitigating agency conflicts, and reducing transaction costs.
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Working Capital Management and Performance in Financially Dependent Firms: Evidence from Developing Asian Economies
TL;DR: In this paper , the authors examined the impact of working capital management on firm performance in nine developing economies in Asia, focusing on two critical aspects: the management of trade credit and inventory.
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.
Journal ArticleDOI
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.