Debt Structure and Bankruptcy of Financially Distressed Small Businesses
Using a large sample of financially distressed small firms in Japan, we find that a distressed firm goes bankrupt faster if it uses proportionately more trade credits. Financially distressed firms experiencing a sharp decrease in trade payables are also more likely to go bankrupt. This suggests that coordination failure among a large number of dispersed trade creditors contributes to the bankruptcy of financially distressed firms. This finding supports the hypothesis that suppliers have an incentive to acquire credit information on distressed firms, and are able to do so more quickly than banks. Accordingly, they withdraw credits more quickly because trade credits, unlike bank loans, are unsecured.
Year of publication: |
2007-05
|
---|---|
Authors: | Daisuke, TSURUTA ; XU, Peng |
Institutions: | Research Institute of Economy, Trade and Industry (RIETI) |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Life Duration and Debt Structure of Financially Distressed SMEs (Japanese)
Peng, XU, (2006)
-
Information Asymmetry in SME Credit Guarantee Schemes: Evidence from Japan
Kuniyoshi, SAITO, (2014)
-
Nonbank Financing and the Moral Hazard of SMEs (Japanese)
Daisuke, TSURUTA, (2005)
- More ...