Trade Credit and Financing Instruments
Trade Credit and Financing Instruments

Author: Lucia Gibilaro

Publisher:

Published: 2018-12-18

Total Pages: 0

ISBN-13: 9781948976015

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This book offers managers a complete analysis of the various facets of commercial credit and presents an analysis of the various types of markets, instruments, and risks associated with trade credit in supply chains across the globe. Trade credit is extensively used in both domestic and international commercial transactions. Although it clearly supports growth, its significance is even greater for developed countries, where the market has recovered remarkably since the global financial crisis. The number and heterogeneity of motivations to trade credit justify the variability observed in the data on global trading, and the role of trade credit has become crucial in supply chain coordination. A range of diverse trade credit finance solutions are available and include products and services offered by financial intermediaries and market products, highlighting a very interesting set of intermediate solutions that have emerged as a result of new technologies utilized in financial services. For financiers trade credit is an attractive option, but an in-depth evaluation of the possibility of losses forms the basis of a deep understating of numerous sources that can create credit risk (default and dilution risk). This book offers managers a complete analysis of the various facets of commercial credit and presents an analysis of the various types of markets, instruments, and risks associated with trade credit in supply chains across the globe.

Trade Credit and Bank Credit
Trade Credit and Bank Credit

Author: Inessa Love

Publisher: World Bank Publications

Published: 2005

Total Pages: 34

ISBN-13:

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"The authors study the effect of financial crises on trade credit in a sample of 890 firms in six emerging economies. They find that although provision of trade credit increases right after the crisis, it consequently collapses in the following months and years. The authors observe that firms with weaker financial position (for example, high pre-crisis level of short-term debt and low cash stocks and cash flows) are more likely to reduce trade credit provided to their customers. This suggests that the decline in aggregate credit provision is driven by the reduction in the supply of trade credit, which follows the bank credit crunch. The results are consistent with the "redistribution view" of trade credit provision, in which bank credit is redistributed by way of trade credit by the firms with stronger financial position to the firms with weaker financial stand "--World Bank web site.

Trade Credit and Bank Credit
Trade Credit and Bank Credit

Author: Inessa Love

Publisher: World Bank Publications

Published: 2005

Total Pages: 34

ISBN-13:

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"The authors study the effect of financial crises on trade credit in a sample of 890 firms in six emerging economies. They find that although provision of trade credit increases right after the crisis, it consequently collapses in the following months and years. The authors observe that firms with weaker financial position (for example, high pre-crisis level of short-term debt and low cash stocks and cash flows) are more likely to reduce trade credit provided to their customers. This suggests that the decline in aggregate credit provision is driven by the reduction in the supply of trade credit, which follows the bank credit crunch. The results are consistent with the "redistribution view" of trade credit provision, in which bank credit is redistributed by way of trade credit by the firms with stronger financial position to the firms with weaker financial stand "--World Bank web site.

Does Trade Credit Substitute Bank Credit? Evidence From Firm-Level Data
Does Trade Credit Substitute Bank Credit? Evidence From Firm-Level Data

Author: Mr.Guido De Blasio

Publisher: International Monetary Fund

Published: 2003-08-01

Total Pages: 29

ISBN-13: 1451858124

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The paper examines micro data on Italian manufacturing firms' inventory behavior to test the Meltzer (1960) hypothesis according to which firms substitute trade credit for bank credit during periods of monetary tightening. It finds that their inventory investment is constrained by the availability of trade credit. As for the magnitude of the substitution effect, however, this study finds that it is not sizable. This is in line with the micro theories of trade credit and the evidence on actual firm practices, according to which credit terms display modest variations over time.

Formal Finance and Trade Credit During China's Transition
Formal Finance and Trade Credit During China's Transition

Author: Robert J. Cull

Publisher: World Bank Publications

Published: 2007

Total Pages: 36

ISBN-13:

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Using a large panel dataset of Chinese industrial firms, the authors examine the determinants of access to loans from formal financial intermediaries and extension of trade credit. Poorly performing state-owned enterprises were more likely to redistribute credit to firms with less privileged access to loans through trade credit, a pattern consistent with some of the extension of trade credit being involuntary. By contrast, profitable private domestic firms were more likely to extend trade credit than unprofitable ones. Trade credit likely provided a substitute for loans for these private firms' customers that were shut out of formal credit markets. As biases in lending became less severe, the amount of trade credit extended by private firms declined.

Trade Credit and the Effect of Macro-Financial Shocks
Trade Credit and the Effect of Macro-Financial Shocks

Author: Mr.Yungsan Kim

Publisher: International Monetary Fund

Published: 2003-06-01

Total Pages: 36

ISBN-13: 1451855001

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Many studies examine why firms are financed by their suppliers, but few empirical studies look at the macroeconomic implications of such financial arrangements. Using disaggregated panel data, we examine how firms extend and use trade credit. We find that, controlling for the transactions or asset management motive, both accounts payable and receivable increase with tighter policy, implying that trade credit helps firms absorb the effect of a credit contraction. A comparison of S&P 500 firms with smaller firms, however, provides no evidence that when policy is tightened, large firms play the role of credit suppliers more actively than small firms.

Trade credit, financial intermediary development, and industry growth
Trade credit, financial intermediary development, and industry growth

Author: Raymond Fisman

Publisher: World Bank Publications

Published: 2001

Total Pages: 34

ISBN-13:

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Where do firms turn for financing in countries with poorly developed financial markets? One source is trade credit. And where formal financial intermediaries are deficient, industries that rely more on this source of financing grow faster.

credit chains and sectoral comovement: does the use of trade credit amplify sectoral shocks?
credit chains and sectoral comovement: does the use of trade credit amplify sectoral shocks?

Author: Claudio Raddatz

Publisher: World Bank Publications

Published: 2010

Total Pages: 53

ISBN-13:

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This paper provides evidence of the presence and relevance of the credit chain propagation and amplification mechanism described by Kiyotaki and Moore (1997) by looking at its implications for the correlation of industries. In particular, it tests the hypothesis that an increase in the use of trade credit, along the input-output chain linking two industries, results in an increase in their output correlation using detailed data on the correlations and input-output relations of 378 manufacturing industry pairs across 43 countries with different degrees of use of trade credit. The results provide strong support for this hypothesis and indicate that the mechanism is quantitatively relevant.