Access to external finance is a key challenge for the creation, survival and growth of SMEs. This article delves into the “weak funding” handicap of rural small firms (SEs): the access to bank financing and the substitutive role of trade credit for entrepreneurs in rural areas when they...

Analyzing a large firm-level database for European countries, the paper shows that during the Great Recession trade credit amplified the liquidity squeeze on SMEs induced by the contraction of bank credit. Because of their generally weaker bargaining power in the inter-enterprise credit market,...

This paper investigates whether market power affects trade credit decisions. We explore several financial crises in Argentina, Brazil, Mexico and the US that work as exogenous shocks to the supply of short and long term financing for nonfinancial firms. We find that firms with high market power...

In most countries, suppliers of intermediate goods and services are also the main providers of short-term financing to firms. This paper studies the macroeconomic implications of these financial links. In our model, trade credit is the outcome of a long-term contract between firms linked in the...

Using euro area firm-level data since the recent financial crisis, we test whether bank lending constrained small- and medium-sized enterprises (SMEs) are more likely to use or apply for alternative external finance including trade credit, informal lending, loans from other companies, market...

This paper studies the effect of the 2008 financial crisis on trade credit and bank credit for a sample of 1982 firms in thirteen countries in Western Europe. We find that net trade credit decreases gradually for the whole period. On the other hand bank credit stays stable for the first 2 years...

This paper studies the role of the credit crunch in the severe contraction of economic activity during the 2008-09 global financial crisis, using firm-level data from six emerging Asian economies. After controlling for the effect of falling demand, we find that sales declined by less for firms...

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...

In this paper, I investigate whether being part of a business group mitigated the effects of the global financial crisis for Swedish firms. The crisis is used as an exogenous shock to firms' external financing. The investments made by business group firms are compared to those made by standalone...

In this paper we investigate the impact of institutional ownership on UK mergers and acquisitions. We employ a comprehensive sample of M&As conducted by UK acquirers from 2000 to 2010, thus including a full cycle of peak and trough in M&A waves. We find that institutional investors increase the...