Open AccessPosted Content
In-kind finance: a theory of trade credit
Mike Burkart,Tore Ellingsen +1 more
Reads0
Chats0
TLDR
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
Citations
More filters
Journal ArticleDOI
Structural break between small and large firms' behaviour in trade credit and bank credit: evidence from India's retail sector
Bidisha Lahiri,Xi Tian +1 more
TL;DR: In this paper, the simultaneity of firms' decision in choosing between the various options of external financing is recognized and the analysis allows the combination of bank finance and trade credit finance to vary with the firm's size even when all the firms are operating within the same financial infrastructure.
Journal ArticleDOI
Insiders' stock pledging disclosures and credit ratings: Evidence from India
TL;DR: In this article , the impact of insiders' stock pledging disclosures on credit ratings of different debt instruments in India was examined and it was shown that insider stock pledging increases the likelihood of credit rating downgrade and the rating-watch status.
Journal ArticleDOI
How do firms manage liquidity during currency crisis? The case of Turkey
TL;DR: In this article, the authors investigated how the 2018 currency crisis in Turkey, which exacerbated the borrowing costs, has affected the liquidity management of a sample of 186 Turkish listed firms, and found that the impact of the currency crisis on the management of Turkish listed companies was significant.
Finance and Firm Productivity in Africa: Background Study from World Bank Enterprise Survey Data
TL;DR: In this paper, the effect of access to finance on labour productivity, total factor productivity (TFP), and the stochastic frontier trans-log model was investigated for African countries.
References
More filters
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.
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.