In-Kind Finance: A Theory of Trade Credit

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In–Kind Finance: A Theory of Trade Credit

It is typically less profitable for an opportunistic borrower to divert inputs than to divert cash. Therefore, suppliers may lend more liberally than banks. This simple argument is at the core of our contract theoretic model of trade credit in competitive markets. The model implies that trade credit and bank credit can be either complements or substitutes. Among other things, the model explains...

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It is typically less profitable for an opportunistic borrower to divert inputs than to divert cash. Therefore, suppliers may lend more liberally than banks. This simple argument is at the core of our contract theoretic model of trade credit in competitive markets. The model implies that trade credit and bank credit can be either complements or substitutes depending on, amongst other things, the...

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ژورنال

عنوان ژورنال: American Economic Review

سال: 2004

ISSN: 0002-8282

DOI: 10.1257/0002828041464579