This study provides empirical evidence that trade credit durations implied by product distributors' business volumes (implied credit durations) generate business risk for trade credit providers. The study further demonstrates the existence of "optimal"credit durations that minimize business risk...

The provision of trade credit has been explained both by theories that focus on its role in contracting for transactions between firms and by theories that focus on the advantages of liquidity provision along the supply chain. We use the 2007-2009 financial crisis and recession as a natural...