In today’s competitivemarkets, most firms in United Kingdom and United States offer their products on trade credit to stimulate sales and reduce inventory. Trade credit is calculated based on time value of money on the purchase cost (i.e., discounted cash flow analysis). Recently, many researchers use discounted cash flow analysis only on the purchase cost but not on the revenue (which is signi...

This paper examines how competition among suppliers affects their willingness to provide trade credit financing. Trade credit extended by a supplier to a cash constrained retailer allows the latter to increase cash purchases from its other suppliers, leading to a free rider problem. A supplier that represents a smaller share of the retailer’s purchases internalizes a smaller part of the benefit...

Interfirm late payments are a hot issue in the EU, as witnessed by the 1998 bills passed in Italy and in the U.K. and by the soon to be approved EU Directive. Comprehensive information, especially on the effective own cost, is however almost absent in the literature. The paper provides the first detailed evidence of the trade debt own cost for the Italian manufacturing firms, arising out of dis...

Consumers in the online shopping environment have had difficulties in selecting an optimal supplier. This is caused by the fact that current comparison shopping services have limitations in considering sup-plier's various pricing strategies. Current Comparison Shopping Model (CSM) including these limitations may enable online consumers to select a non-optimal supplier. To overcome these problem...

This paper examines the impact of the R&D tax credit between 1981-1991 using confidential IRS data from corporate tax returns. This paper makes two key advances on previous work. First, this paper implements a new instrumental variables (IV) strategy based on tax changes that directly addresses the simultaneity of R&D spending and marginal credit rates. Second, it makes use of new restricted-ac...

It has been shown that input-output linkages along supply chains affect firms' performance such as sales, productivity, and innovative capacity. This paper explores a new aspect in the literature, examining how supply chain relations influence financial transactions between firms. More specifically, this paper, using an exhaustive dataset on buyer-supplier networks in Japan, studies whether sup...

Following the deregulation policies implemented by the Chinese government in 2001, foreign banks were allowed to enter the Chinese banking market gradually, in different years in different cities. As a result, from 2001 to 2006 firms in different cities had differential access to foreign bank credit. Using an extensive firm-level dataset from the manufacturing census in China, this paper studie...

Access to credit markets is generally considered a hallmark of developed economies. In the United States, most households appear to have substantial ability to borrow; indeed, households in the United States have an average of over $23,000 in nonmortgage debt alone. Nevertheless, economists often point to limited borrowing opportunities for lower-income households to explain anomalous findings ...

We use recent farm household survey data from 5 Central European countries to explore the extent to which ill-functioning land and credit markets may present an obstacle to rural development. The first finding is that improved access to credit can, indeed, make a contribution to a more dynamic rural sector. A considerable share of rural households express their desire to expand agricultural cul...