What You Sell Is What You Lend? Explaining Trade Credit Contracts

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ID: 304460
2008
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Abstract
We relate trade credit to product characteristics and aspects of bank–firm relationships and document three main empirical regularities. First, the use of trade credit is associated with the nature of the transacted good. In particular, suppliers of differentiated products and services have larger accounts receivable than suppliers of standardized goods and firms buying more services receive cheaper trade credit for longer periods. Second, firms receiving trade credit secure financing from relatively uninformed banks. Third, a majority of the firms in our sample appear to receive trade credit at low cost. Additionally, firms that are more creditworthy and have some buyer market power receive larger early payment discounts.
Reference Key
openalex_W3122781793 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Mariassunta Giannetti, Mike Burkart, Tore Ellingsen
Journal review of financial studies
Year 2008
DOI
10.1093/rfs/hhn096
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