Trade credit, firm profitability, and financial constraints

Financial Constraints and Firm Dynamics

The short run effects of financial constraints (FCs) on the expected growth rate of firms and their long-term implications on the evolution of the firm size distribution have been recently investigated by several scholars. In this paper we extend the analysis to a wider and largely unexplored range of possible FCs effects, including the autoregressive and heteroskedastic structure of the firm g...

Profitability, Trade Credit and Institutional Structure of Production

I use a novel database to construct structure of supply chains for 990 firms operating in five sectors of the US economy and present a methodology to measure the vertical position of each firm in the supply chain. I find that firms further up from the producers of final goods have on average larger net receivables and profits relative to their cost of production. In addition, the difference in ...

Skill Acquisition, Credit Constraints, and Trade

This paper looks at the e¤ect of credit constraints on skill acquisition when agents have heterogeneous abilities and wealth. We use a general equilibrium model and assume credit markets are absent. Two payment systems for training are explored. Under the …rst, payment is made up front and as a result, credit constraints are severe. In the second, a form of work study is allowed, and this helps...

Credit constraints, firm exports and financial development: Evidence from developing countries

This paper examines whether financial development reduces the impact of credit constraints on the exporting decision using firm-level data across 17 developing countries. We approximate credit constraints by a firm’s liquidity ratio. In line with a Melitz-type model with borrowing frictions, the regression analysis confirms that the positive effect of a firm’s liquidity on the exporting probabi...

Trade Credit versus Bank Credit during Financial Crises