Trade Credit During Financial Crisis: Do Market Power and Financial Constraints Matter?

Gonçalves, Adalto Barbaceia; Schiozer, Rafael Felipe; Sheng, Hsia Hua

doi:10.2139/ssrn.2723504

Cited by 1 publication

(1 citation statement)

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“…Our results complement previous studies such as Gonçalves et al (2016), who found that: firms reduced receivable days during the crisis; firms with low market power increased payable days, and net TC decreased after the crisis occurred. Other results indicate that firms that are financially more exposed to crises extend less TC to their clients (Love et al, 2007); as financing conditions get worse, the more financially exposed firms address TC obtained as an additional form of financing (Coulibaly et al, 2013); more financially constrained firms are more likely to be negatively affected by crises and, thus, are more likely to decrease credit provided and increase credit obtained (Yang, 2011b).…”

Section: Gmm Panel Var Estimatessupporting

confidence: 90%

Determinants of Net Trade Credit: A Panel VAR Approach Based on Industry

Madaleno¹,

Bărbuță-Mișu²,

Deari³

2019

Prague Economic Papers

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This paper aims to study the dynamic relationship between dependent variables of trade credit (net trade credit to total assets and net trade credit to sales), and six independent variables (profit margin, liquidity ratio, and the dummies collection, credit, size, and crisis) using panel vector autoregression during the period 2004−2013 considering data from eight European countries. The results indicate that net trade credit is negatively influenced by crises, forcing firms to use it less due to survival effects but imposing higher trade restrictions. Notwithstanding, net trade credit to sales is positively influenced by the liquidity ratio and profit margin, and vice-versa, but has a negative relationship with credit and collection dummies, imposing credit shortenings and forcing reliance on short-term credit. For the overall period, firms seem to have sold more than having bought on credit due to tightening trade credit, an effect of the financial crisis.

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Section: Gmm Panel Var Estimatessupporting

confidence: 90%