We study the relationship between net trade credit and firms' investment levels, focusing on financially distressed firms. First, we introduce a theoretical model to predict the role played by net trade credit as a coordination device differentiating firms by their degree of financial distress....

Trade credit is often extended by suppliers to buyers who often have easier access to external financing. Moreover, many buyers also delay paying their suppliers beyond the agreed due day. Prior literature attributes this phenomenon to quality assurance or buyer's abuse of market power. In this...

We study the role of trade credit in enhancing the resilience of financially constrained firms from 2010 to 2017. Implicit borrowing in trade finance allows financially constrained firms to bridge the financing gap, expand employment by 8.26 per cent, and increase average firm profits...