holding and its substitutes, trade credit and short-term bank finance, the study develops a panel vector autoregression that … signalling theory of trade credit and show that firms experiencing liquidity shocks resort to cash or trade credit but not to … bank finance. Increasing cash improves access to trade credit. Additional cash or trade credit triggers a slowdown of the …

This paper reviews empirical evidence on the use of bank lines of credit as a source of corporate liquidity …. Traditional explanation for lines of credit is that they provide insurance against liquidity shocks, in much the same as way … hoarding cash does. However, recent empirical research suggests that access to lines of credit is contingent on the credit …