I develop a simple contract-theoretic model of multi-stage economies to address the nexus between trade credit, bank credit and balance-sheet contagion. First, I show that competitive markets in which heterogeneous price-taker firms compete strategically by setting trade credit settlements have...

I develop a simple contract-theoretic model of multi-stage economies to address the nexus between trade credit, bank credit and balance-sheet contagion. First, I show that competitive markets in which heterogeneous price-taker firms compete strategically by setting trade credit settlements have...

Trade credit extended to suppliers in the video game industry does not serve as a commitment device for large customers in determining which vendors to make relationship-specific investments in. Suppliers of video games are better off investing in relationships with trade creditors than seeking...

How do shocks to the banking sector travel through the corporate economy? Using a novel dataset of inter-firm sales, I show that suppliers exposed to a large and exogenous decline in bank financing pass this liquidity shock to their downstream customers. The spillover effect occurs through two...

Using a unique data set on trade credit defaults among French firms, we investigate whether and how trade credit is used to relax financial constraints. We show that firms that face idiosyncratic liquidity shocks are more likely to default on trade credit, especially when the shocks are...

Scholars and practitioners believe that supply chain visibility (SCV) is critical to effective supply chain management, enabling firms to lower operational costs and enhance efficiency. In this research, we investigate the impact of SCV on firms’ trade credit, a widely neglected yet critical...

We find evidence that input suppliers provide credit quality certification to their borrowers. Banks are more likely to lend to firms that have been granted trade credit by their suppliers and to firms that pay higher proportions of their trade credit debts on time. This ‘certification' role...

Buyers and suppliers have diverging interests about trade-credit maturities: buyers desire long payment periods as a source of cheap funding, while suppliers prefer swift payments to avoid locking up scarce liquidity in idle assets. A fast-growing financial product innovation - supply-chain...

Using a customer-supplier matched sample of US-listed firms from 1980 to 2016, we study the corporate cash-holding relationship between suppliers and their major customers. The key findings suggest that the cash-holding levels of suppliers are positively affected by those of their major...

This paper provides evidence that the formation of global supply chain partnerships predicts significant increases, relative to otherwise similar firms, in cross-border financing. Our findings are detected in all three major financing markets - equities, syndicated loans, and public debt - as...