What you sell is what you lend? Explaining trade credit contracts

Giannetti, Mariassunta, Burkart, Mike ORCID: 0000-0002-0954-4499 and Ellingsen, Tore (2011) What you sell is what you lend? Explaining trade credit contracts. Review of Financial Studies, 24 (4). pp. 1261-1298. ISSN 0893-9454

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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.

Item Type:	Article
Official URL:	https://academic.oup.com/rfs
Additional Information:	© 2008 The Author
Divisions:	Finance
Subjects:	H Social Sciences > HG Finance
JEL classification:	G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure
Date Deposited:	22 Feb 2017 10:04
Last Modified:	12 Dec 2024 00:03
URI:	http://eprints.lse.ac.uk/id/eprint/69543

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