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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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Informal Finance: A Theory of Moneylenders
TL;DR: In this article, the coexistence of formal and informal finance in underdeveloped credit markets is studied and it is shown that informal lenders can prevent non-diligent behavior but often lack the needed capital.
Journal ArticleDOI
Trade credit contract with limited liability in the supply chain with budget constraints
Xiangfeng Chen,Anyu Wang +1 more
TL;DR: It is found that trade credit contract could create value in a supply chain with budget constraints, and partly coordinate the supply chain.
BookDOI
A More Complete Conceptual Framework for Financing of Small and Medium Enterprises
TL;DR: In this paper, a more complete conceptual framework for analysis of credit availability for small and medium enterprises (SMEs) is proposed, emphasizing a causal chain from policy to financial structures which affect the feasibility and profitability of different lending technologies.
Journal ArticleDOI
Trade Credit, Bank Credit, and Flight to Quality: Evidence from French SMEs
TL;DR: In this article, the impact of the global financial crisis on the allocation of credit to small and medium-sized enterprises (SMEs) was investigated using samples of rench s from four industries.
Posted Content
Booms and Systemic Banking Crises
TL;DR: In this paper, a dynamic general equilibrium model featuring a non-trivial banking sector is proposed to explain systemic banking crises, where banks are heterogeneous with respect to their intermediation skills, which gives rise to an interbank market.
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.