The extant literature on trade credit emphasizes its financing role wherein financially sound firms provide trade credit to ease the credit constraints of weaker trading partners. We offer an alternative, though not mutually exclusive, perspective in which trade credit serves as a commitment...

The extant literature on trade credit emphasizes its financing role wherein financially sound firms provide trade credit to ease the credit constraints of weaker trading partners. We offer an alternative, though not mutually exclusive, perspective in which trade credit serves as a commitment...

We show that production networks are important for the transmission of unconventional monetary policy. We find that firms with bonds eligible for purchase under the European Central Bank's Corporate Sector Purchase Program act as financial intermediaries by extending more trade credit to their...

Firm's social network can bring about competition advantage, while trade credit may reflect the competitiveness of firm's business operations, but it is a pity that there is a lack of studies on the social network and business credit. This paper investigate the influence of different degrees of...

This paper examines the role of trade credit in a comprehensive panel of 290,301 SMEs across 15 European countries over the period 2003-2012. The results show that trade credit served as an important source of finance for credit constrained firms, and that the financial position of firms...

This study examines the consequences of conflicts between creditors. Using the setting of debt covenant violations, I employ a regression discontinuity design to identify the effect of bank interventions on their borrowers' trade credit. The results show that trade credit experiences a...

Financial sector development is an influential force that outlines the financing and governance of firms in emerging economies. Suppliers and bankers represent alternative governance structures to a firm because of their trade credit and loan requirements, respectively. The continuous monitoring...

We investigate whether and how shocks propagate through trade credit. We exploit a large negative liquidity shock to firms in the Brazilian food industry, resulting from the announcement of a fraud investigation named Operation Weak Flesh. Using a differences-in-differences analysis, we show...

We document that borrowers of banks that received capital support under TARP/CPP significantly increased their quarterly provision of trade credit (accounts receivable) during the crisis by 5.2 percent, while borrowers of other banks did not. The effect is strongest in 2008Q4, and larger for...

We propose and empirically test a novel trade credit channel through which the presence of foreign-owned firms can propagate international liquidity shocks to a local country despite its tight controls over portfolio flows. A well-documented advantage of foreign-owned firms, especially large...