Trade credit in Italy: Evidence from individual firm data

In the first detailed study of the trade debt own cost for the Italian manufacturing firms it is shown that, comparing also self-defined bank lending rationed and non rationed firms, interfirm credit received is, if ever, only slightly more expensive than bank credit. Besides establishing the greater reactivity of credit received rather than granted to the external funds implicit cost, it is found that discount offered affects significantly credit granted. Estimates are robust splitting the sample according to various criteria; larger firms, probably because less financially constrained, react more strongly to sales reductions via longer credit and debt periods.