- Firms’ trade-financing decisions during crises
- Book title
- Trade finance during the great trade collapse
- Pages (from-to)
- Number of pages
- Washington, D.C.: World Bank
- Document type
- Faculty of Economics and Business (FEB)
- Amsterdam Business School Research Institute (ABS-RI)
Firms procure funds not only from specialized financial intermediaries, but also from suppliers, generally by delaying payments. The empirical evidence on trade credit raises questions that are hard to reconcile with existing theories:
• What justifies the widespread use of trade credit by financially unconstrained firms that have access to seemingly cheaper alternative sources?
• Why is the reliance on trade credit not always increasing in the degree of credit rationing?
• Does input lending affect the borrower’s choice of inputs?
• Does the degree of creditor protection affect financing and input choices? This chapter addresses these questions in a unified framework.
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