Funding Liquidity without Banks: Evidence from a Shock to the Cost of Very Short-Term Debt / Felipe Restrepo, Lina Cardona Sosa, Philip E. Strahan.

Format:

Book

Author/Creator:

Restrepo, Felipe.

Contributor:

National Bureau of Economic Research.

Sosa, Lina Cardona.

Strahan, Philip E.

Series:

Working Paper Series (National Bureau of Economic Research) no. w23179.

NBER working paper series no. w23179

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Funding Liquidity without Banks

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2017.

Summary:

In 2011, Colombia instituted a tax on repayment of bank loans, thereby increasing the cost of short-term bank credit more than long-term credit. Firms responded by cutting their short-term loans for liquidity management purposes and increasing their use of cash and trade credit. In industries where trade credit is more accessible (based on U.S. Compustat firms), we find substitution into accounts payable and little effect on cash and investment. Where trade credit is less available, firms increase cash and cut investment. Thus, trade credit offers a substitute source of liquidity that can insulate some firms from bank liquidity shocks.

Notes:

Print version record

February 2017.