Business, Management and Accounting
4 years ago

Suppliers stepping in as lenders when banks fail small businesses.

1 view
Review of Financial Studies
Trade Credit: Theories and Evidence
Mitchell A. Petersen, Raghuram G. Rajan

Paper Summary

Firms sometimes get money from their suppliers instead of banks. Small firms use more supplier credit when they can't get bank loans. Suppliers give credit because they know more about buyers, can sell assets quickly, and have a stake in the firms. Firms with good access to bank loans give more supplier credit.

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