Business, Management and Accounting
4 years ago

Financial crises lead to reduced trade credit, impacting vulnerable firms disproportionately.

1 view
Journal of Financial Economics
Trade credit and bank credit: Evidence from recent financial crises
Inessa Love, Lorenzo A. Preve, Virginia Sarria‐Allende

Paper Summary

Financial crises lead to an initial increase in trade credit, but it decreases over time. Companies hit hard by crises provide less trade credit. The drop in overall trade credit is due to less bank credit available, causing stronger companies to give less credit to weaker ones.

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