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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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The short-term debt choice under asymmetric information
TL;DR: In this paper, the authors investigated whether the market level of information asymmetry affects firms' debt financing decisions and found that firms with higher information asymmetries use shorter debt maturities.
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Adaptation to Shocks and The Role of Capital Structure: Danish Exporters During the Cartoon Crisis
Benjamin Friedrich,Michał Zator +1 more
TL;DR: In this paper, the authors study the response of Danish products in Muslim countries to a Danish newspaper publishing caricatures of prophet Muhammad and find that firms with low leverage compensate for lost demand by increasing investment, introducing new products and redirecting their sales elsewhere.
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An empirical analysis of the impact of trade credit on bank debt restructuring
TL;DR: In this paper, the authors analyzed the relationship between the likelihood that Italian firms implement bank debt restructuring and the trade credit and found that companies in financial distress have used trade credit extensively and suffer from the deferment of receivables.
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Operational and financial configurations contingent on market power status
TL;DR: In this article, a stylized model of a manufacturing firm's operational and financial configuration was developed and tested using data for publicly traded U.S. manufacturing firms for the period 1984-2014.
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Organizational resilience and performance: an analysis of the relevance of suppliers’ trade credit and bank diversification in the Spanish construction industry
TL;DR: In this article, the authors determine the effect of relevant variables related to strategic sources of financial resources, such as suppliers' trade credit and use of financial institutions, over performance among Spanish construction firms.
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.