Trade Credit and Bank Credit : Evidence from Recent Financial Crises

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 we...

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Main Authors:	Love, Inessa, Preve, Lorenzo A., Sarria-Allende, Virginia
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ASSETS BALANCE SHEET BALANCE SHEETS BANK CREDIT BANK LENDING BORROWING BUSINESS CYCLES CORPORATE FINANCE DEBT DEVALUATION ECONOMIC ACTIVITY EMERGING MARKETS EQUILIBRIUM EXCHANGE RATE EXPLOITATION FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIARY DEVELOPMENT FINANCIAL MARKETS FINANCIAL POLICIES FINANCIAL STRENGTH FUELS FUTURE RESEARCH GDP GROWTH RATE ILLIQUIDITY INSURANCE INTEREST RATES INTERNATIONAL FINANCE INTERNATIONAL INVESTORS LABOR COSTS LIQUIDITY MACROECONOMICS MARKET VALUE MONETARY POLICY NET ASSETS NET SALES PROFITABILITY PUBLIC POLICY REGRESSION ANALYSIS REORGANIZATION TERMS OF TRADE TRADE CREDIT TRADE CREDITORS
Online Access:	http://documents.worldbank.org/curated/en/2005/09/6284707/trade-credit-bank-credit-evidence-recent-financial-crises http://hdl.handle.net/10986/8274

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recordtype	oai_dc
spelling	okr-10986-82742021-04-23T14:02:43Z Trade Credit and Bank Credit : Evidence from Recent Financial Crises Love, Inessa Preve, Lorenzo A. Sarria-Allende, Virginia ASSETS BALANCE SHEET BALANCE SHEETS BANK CREDIT BANK LENDING BORROWING BUSINESS CYCLES CORPORATE FINANCE DEBT DEVALUATION ECONOMIC ACTIVITY EMERGING MARKETS EQUILIBRIUM EXCHANGE RATE EXPLOITATION FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIARY DEVELOPMENT FINANCIAL MARKETS FINANCIAL POLICIES FINANCIAL STRENGTH FUELS FUTURE RESEARCH GDP GROWTH RATE ILLIQUIDITY INSURANCE INTEREST RATES INTERNATIONAL FINANCE INTERNATIONAL INVESTORS LABOR COSTS LIQUIDITY MACROECONOMICS MARKET VALUE MONETARY POLICY NET ASSETS NET SALES PROFITABILITY PUBLIC POLICY REGRESSION ANALYSIS REORGANIZATION TERMS OF TRADE TRADE CREDIT TRADE CREDITORS 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 2012-06-18T15:56:21Z 2012-06-18T15:56:21Z 2005-09 http://documents.worldbank.org/curated/en/2005/09/6284707/trade-credit-bank-credit-evidence-recent-financial-crises http://hdl.handle.net/10986/8274 English Policy Research Working Paper; No. 3716 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean East Asia and Pacific Korea, Republic of Indonesia Mexico Thailand Philippines Malaysia
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ASSETS BALANCE SHEET BALANCE SHEETS BANK CREDIT BANK LENDING BORROWING BUSINESS CYCLES CORPORATE FINANCE DEBT DEVALUATION ECONOMIC ACTIVITY EMERGING MARKETS EQUILIBRIUM EXCHANGE RATE EXPLOITATION FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIARY DEVELOPMENT FINANCIAL MARKETS FINANCIAL POLICIES FINANCIAL STRENGTH FUELS FUTURE RESEARCH GDP GROWTH RATE ILLIQUIDITY INSURANCE INTEREST RATES INTERNATIONAL FINANCE INTERNATIONAL INVESTORS LABOR COSTS LIQUIDITY MACROECONOMICS MARKET VALUE MONETARY POLICY NET ASSETS NET SALES PROFITABILITY PUBLIC POLICY REGRESSION ANALYSIS REORGANIZATION TERMS OF TRADE TRADE CREDIT TRADE CREDITORS
spellingShingle	ASSETS BALANCE SHEET BALANCE SHEETS BANK CREDIT BANK LENDING BORROWING BUSINESS CYCLES CORPORATE FINANCE DEBT DEVALUATION ECONOMIC ACTIVITY EMERGING MARKETS EQUILIBRIUM EXCHANGE RATE EXPLOITATION FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIARY DEVELOPMENT FINANCIAL MARKETS FINANCIAL POLICIES FINANCIAL STRENGTH FUELS FUTURE RESEARCH GDP GROWTH RATE ILLIQUIDITY INSURANCE INTEREST RATES INTERNATIONAL FINANCE INTERNATIONAL INVESTORS LABOR COSTS LIQUIDITY MACROECONOMICS MARKET VALUE MONETARY POLICY NET ASSETS NET SALES PROFITABILITY PUBLIC POLICY REGRESSION ANALYSIS REORGANIZATION TERMS OF TRADE TRADE CREDIT TRADE CREDITORS Love, Inessa Preve, Lorenzo A. Sarria-Allende, Virginia Trade Credit and Bank Credit : Evidence from Recent Financial Crises
geographic_facet	Latin America & Caribbean East Asia and Pacific Korea, Republic of Indonesia Mexico Thailand Philippines Malaysia
relation	Policy Research Working Paper; No. 3716
description	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
format	Publications & Research :: Policy Research Working Paper
author	Love, Inessa Preve, Lorenzo A. Sarria-Allende, Virginia
author_facet	Love, Inessa Preve, Lorenzo A. Sarria-Allende, Virginia
author_sort	Love, Inessa
title	Trade Credit and Bank Credit : Evidence from Recent Financial Crises
title_short	Trade Credit and Bank Credit : Evidence from Recent Financial Crises
title_full	Trade Credit and Bank Credit : Evidence from Recent Financial Crises
title_fullStr	Trade Credit and Bank Credit : Evidence from Recent Financial Crises
title_full_unstemmed	Trade Credit and Bank Credit : Evidence from Recent Financial Crises
title_sort	trade credit and bank credit : evidence from recent financial crises
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2005/09/6284707/trade-credit-bank-credit-evidence-recent-financial-crises http://hdl.handle.net/10986/8274
_version_	1764407777667579904

Trade Credit and Bank Credit : Evidence from Recent Financial Crises

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