This paper investigates empirically the theoretical motivations for the use of trade credit by firms for purchases. The extent to which trade credit is used for purchases and the accounts payable to total assets ratio, i.e. the demand for trade credit, are modelled here as a function of transaction costs motivations, financing motivations, operational considerations, seller compliance issues, s...

Micro financing is providing financial services and resources for low-income people to improve their financial situation. In many less developed countries, providing these services for low-income classes was next to impossible due to high interest rates and heavy collaterals and guarantees that banks and other credit institutions demand. Micro financing was used since 1960s as a fundamenta...

The study, aimed at evaluating the likely effects of the EC Directive on late payments, provides direct evidence that interfirm credit received by Italian manufacturing firms is, if ever, only slightly more expensive than bank loans. An econometric exercise shows that financial determinants have a stronger impact on recorded credit and debt periods for larger firms, able to use trade credit to ...

We analyze a new dataset on borrowing decisions of a sample of customers of a credit card company. This credit card allows customers to pay for their purchases via installment credit over terms up to 12 months at an interest rate that depends on the customer’s credit score and the duration of the installment loan. We use these data to estimate the effect of interest rates on consumers’ demand f...

The initial promise of microcredit, including such accolades as the 2006 Nobel Peace Prize, has given way to intense debate about if and when it is an effective development tool. Interest rates are central to this debate. Policymakers and donors promoting financial development have variously encouraged microfinance institutions (MFIs) to cut rates to expand access (under the assumption of elast...

This paper provides the first evidence on gender differences in investment financing, credit application and credit denial rates in Germany. The empirical analysis is carried out on a sample of firms drawn from the KfW Mittelstandspanel, a representative survey of German SMEs for the period from 2003 to 2009. Our results suggest that in female-owned firms the share of internal capital in invest...

The supply and demand of credit are not always well aligned and matched, as is reflected in the countercyclical excess reserve-to-deposit ratio and interest spread between the lending rate and the deposit rate. We develop a search-based theory of credit allocation to explain the cyclical fluctuations in bank reserves, the interest spread, as well as credit rationing. We show that search frictio...

This paper studies how credit constraints develop over bank relationships. I analyze a unique dataset of matched loan application and loan contract information and measure credit constraints as the ratio of requested to granted loan amounts. I find that the most important determinants of receiving smaller than requested loan amounts are firm age and size at the time of the first interaction bet...

We analyze a new dataset on borrowing decisions of a sample of customers of a credit card company. This credit card allows customers to pay for their purchases via installment credit over terms up to 12 months at an interest rate that depends on the customer’s credit score and the duration of the installment loan. We use these data to estimate the effect of interest rates on consumers’ demand f...