Does Trade Credit Substitute for Bank Credit? Evidence from Firm-Level Data

By Guido Blasio. Social Science Research Network, 2003

183 citations recorded by the source corpus.

The paper examines micro data on Italian manufacturing firmsi?½ 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.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/8fd30f35ab26f0951d379cabaa5738bc18a697bf

How researchers see this paper

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In Accounting

1. Raffaello Bronzini
2. Margarita Protopappa-Sieke
3. Daniel Seifert
4. Ralf W. Seifert
5. Guido Blasio

In Economics and Econometrics

1. Raffaello Bronzini
2. Guido Blasio
3. Margarita Protopappa-Sieke
4. Guglielmo Barone
5. S. Mocetti

Citations in the corpus

• A review of trade credit literature: Opportunities for research in operations (2013, background): “Internationally , these levels can be even higher and trade credit exceeds, by far, short-term bank credit (De Blasio, 2005; Rajan and Zingales, 1995 ).”
• Evaluating the impact of investment incentives: The case of Italy's Law 488/1992☆ (2006, background): “de Blasio / Journal of Urban Economics 60 (2006) 327–349”