Trade credit and bank credit : evidence from recent financial crises / Inessa Love, Lorenzo A. Preve, Virginia Sarria-Allende.

Format:

Book

Government document

Author/Creator:

Love, Inessa.

Contributor:

World Bank.

Preve, Lorenzo A.

Series:

Policy research working papers ; 3716.

World Bank e-Library.

Policy research working paper ; 3716

Language:

English

Subjects (All):

Bank loans.

Credit.

Financial crises.

Other Title:

Policy research working paper vol. 3716

Place of Publication:

[Washington, D.C. : World Bank, 2005]

System Details:

data file

Summary:

"The authors study the effect of financial crises on trade credit in a sample of 890 firms in six emerging economies. They find that although provision of trade credit increases right after the crisis, it consequently collapses in the following months and years. The authors observe that firms with weaker financial position (for example, high pre-crisis level of short-term debt and low cash stocks and cash flows) are more likely to reduce trade credit provided to their customers. This suggests that the decline in aggregate credit provision is driven by the reduction in the supply of trade credit, which follows the bank credit crunch. The results are consistent with the "redistribution view" of trade credit provision, in which bank credit is redistributed by way of trade credit by the firms with stronger financial position to the firms with weaker financial stand "--World Bank web site.

Notes:

Title from PDF file as viewed on 9/14/2005.

Includes bibliographical references.

Publisher Number:

10.1596/1813-9450-3716