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 a unique symmetric equilibrium, which dictates the production flow along the …

Trade credit is reciprocal in that firms grant credit to customers and also accept credit from suppliers, but the … literature. Panel data regression analysis is used in the estimation of functions relating the effects of trade credit channel … and net trade credit on performance. The results of a panel of 1,708 firms over the period 2003-2012 show a positive …