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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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Trade Credit and Credit Rationing in Canadian Firms
TL;DR: The model of trade credit and bank credit rationing as mentioned in this paper predicts that trade credit will be used by medium-wealth and low-wealth firms to help ease the burden on banks.
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Financing the newsvendor with preferential credit : bank vs. manufacturer
TL;DR: The authors examines how preferential credit based on retailers' credit line impacts on capital-constraint retailer's operational decisions and considers a condition of loan competition when banks offer preferential credit to retailers.
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The effect of firm characteristics in accessing credit for SMEs
TL;DR: In this paper, the authors examined various firm attributes that affect access to credit using a sample of 970 SMEs that operate across nine provinces of Mediterranean and Southeast Anatolia regions in Turkey and found that asset size, sales volume and stability, export rate, and legal form are important determinants of satisfaction with bank products and services.
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The Cash Flow Advantages of 3PLs as Supply Chain Orchestrators
TL;DR: In this paper, the conditions under which this innovation benefits all parties in the chain so that the business model is sustainable are explored. And the authors find that the intermediary role of the 3PL is crucial, in that its benefit vanishes if the manufacturer chooses to grant payment delay to the buyers directly.
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Optimizing the credit term decisions in supply chain finance
TL;DR: This work offers the first data-driven model and solution approach that assists purchasing and supply managers to make optimal dynamic credit term decision in conjunction with production, ordering and inventory decisions in a game-theoretic setting.
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.