Trade Credit, Bank Credit and Profits: Evidence from Indian Manufacturing Firms

Counter-cyclical substitution between trade credit and bank credit

This paper explores the substitution relationship between trade credit and bank credit, and its countercyclic dynamic pattern through economic cycles. We propose a new theoretical model, using a mechanism design method, which predicts the substitution between the two credits and its counter-cyclic behavior, subject to the condition of technological efficiency not less than one. This model also ...

Trade Credit and Credit Rationing in Canadian Firms

Burkart and Ellingsen’s (2004) model of trade credit and bank credit rationing predicts that trade credit will be used by medium-wealth and low-wealth firms to help ease bank credit rationing. The author tests these and other predictions of Burkart and Ellingsen’s model using a large sample of more than 28,000 Canadian firms. She uses an endogenous method to divide the firms into the appropriat...

Foreign bank entry and firmsメ access to bank credit: Evidence from China

This paper studies the impact of foreign bank entry on domestic firms’ access to bank credit using a within-country staggered geographic variation in the policy of foreign bank lending in China. The paper finds that after foreign bank entry profitable firms use more long-term bank loans; whereas firms with higher value of potential collateral do not. It also finds that non-state-owned firms bec...

Trade Credit versus Bank Credit during Financial Crises

Does ownership structure affect trade credit policy in small- and medium-sized firms? Evidence from China

This paper examines whether and how ownership structure affects the trade credit policies in smalland medium-sized firms (SMEs) using a sample obtained from a survey of Chinese enterprises. Specifically, we examine how ownership concentration affects SMEs’ use of trade credit through influencing the availability of bank credit. We also examine whether the ownership of the ultimate controller in...