Trade credit: Suppliers as debt collectors and insurance providers

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• dc.contributor.author Cuñat, Vicenteca
• dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
• dc.date.accessioned 2017-07-26T12:07:57Z
• dc.date.available 2017-07-26T12:07:57Z
• dc.date.issued 2002-06-01
• dc.date.modified 2017-07-23T02:06:55Z
• dc.description.abstract There are two fundamental puzzles about trade credit: why does it appear to be so expensive,and why do input suppliers engage in the business of lending money? This paper addresses and answers both questions analysing the interaction between the financial and the industrial aspects of the supplier-customer relationship. It examines how, in a context of limited enforceability of contracts, suppliers may have a comparative advantage over banks in lending to their customers because they hold the extra threat of stopping the supply of intermediate goods. Suppliers may also act as lenders of last resort, providing insurance against liquidity shocks that may endanger the survival of their customers. The relatively high implicit interest rates of trade credit result from the existence of default and insurance premia. The implications of the model are examined empirically using parametric and nonparametric techniques on a panel of UK firms.
• dc.format.mimetype application/pdfca
• dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=625
• dc.identifier.citation Review of Financial Studies, forthcoming
• dc.identifier.uri http://hdl.handle.net/10230/760
• dc.language.iso eng
• dc.relation.ispartofseries Economics and Business Working Papers Series; 625
• dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
• dc.subject.keyword trade credit
• dc.subject.keyword debt enforceability
• dc.subject.keyword liquidity
• dc.subject.keyword Finance and Accounting
• dc.title Trade credit: Suppliers as debt collectors and insurance providersca
• dc.type info:eu-repo/semantics/workingPaper