Does Trade Credit Substitute Bank Credit? Evidence From Firm-Level Data
Author | : Mr.Guido De Blasio |
Publisher | : International Monetary Fund |
Total Pages | : 29 |
Release | : 2003-08-01 |
ISBN-10 | : 9781451858129 |
ISBN-13 | : 1451858124 |
Rating | : 4/5 (29 Downloads) |
Download or read book Does Trade Credit Substitute Bank Credit? Evidence From Firm-Level Data written by Mr.Guido De Blasio and published by International Monetary Fund. This book was released on 2003-08-01 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper examines micro data on Italian manufacturing firms' 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.