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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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Debt financing to new small ventures in South Africa: The impact of collateral, ethics and the legal system
TL;DR: In this paper, the authors assess the impact of collateral on the importance of ethical behavior and the efficiency of the legal system as prerequisites for the availability of external debt to new SMEs.
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Trade-Credit Financing under Financial Constraints: A Relational Perspective and Evidence from Listed Companies in China
TL;DR: In this paper, the authors find that relational debt financing, especially trade credit, is a viable channel to which a firm resorts when facing the binding financial constraints of formal credit in China.
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Corporate Sector Financial Structure in Turkey : A Descriptive Analysis
TL;DR: In this article, the authors present and discuss some stylised facts of the corporate sector financial structure in Turkey using the Company Sector Accounts compiled by the Central Bank of the Republic of Turkey (CBRT).
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Trade credit, sovereign risk and monetary policy in Europe
TL;DR: In this article, the authors analyze how sovereign risk influences the use of trade credit, both directly and through monetary policy, and test whether these effects differ during the crisis as compared to before the crisis.
Earnings management and debt
TL;DR: In this article, the authors find that in a sample of Belgian non-listed firms earnings management (EM) is positively related to leverage, and that debt is heterogeneous in this respect: judging by the amount of EM it triggers, in their sample bank debt seems to be perceived as more alarming than trade credit.
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.
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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.