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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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Gender and the Availability of Credit to Privately Held Firms: Evidence from the Surveys of Small Business Finances
Rebel A. Cole,Hamid Mehran +1 more
TL;DR: In this article, the role of gender in the availability of credit in privately held U.S. firms is examined. But, the authors focus on the ownership of firms and do not consider the gender of the owners.
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Trade credit versus bank credit: Evidence from corporate inventory financing ☆
TL;DR: In this paper, the authors introduce capital market imperfections into a structure framework of inventory investments and investigate impacts of trade credit on firms' inventory dynamics and analyze the relationship between trade credit and bank loans.
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The trade credit channel revisited: evidence from micro data of Japanese small firms
TL;DR: In this paper, a cross-sectional survey data of Japanese SMEs was used to investigate the substitutability between bank loans and trade credit, and they found that SMEs with little access to bank credit depend more on large suppliers for trade credit.
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Do Creditors Prefer Smooth Earnings? Evidence from European Private Firms
Joachim Gassen,Rolf Uwe Fuelbier +1 more
TL;DR: This article investigated the interplay between creditor financing and the smoothness of earnings reported by European private firms and document how heterogeneous debt-contracting infrastructures across Europe moderate this relation.
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Are trade creditors relationship lenders
TL;DR: In this article, the authors test the hypothesis that trade creditors are relationship lenders using SME data from Japan and find that the validity of the relationship lending hypothesis depends on the relative bargaining power between the buyer and sellers.
References
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Journal ArticleDOI
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.