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http://hdl.handle.net/10419/23442
  

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dc.contributor.authorBoissay, Fredericen_US
dc.contributor.authorGropp, Reinten_US
dc.date.accessioned2009-01-29T16:05:45Z-
dc.date.available2009-01-29T16:05:45Z-
dc.date.issued2007en_US
dc.identifier.urihttp://hdl.handle.net/10419/23442-
dc.description.abstractUsing a unique data set on trade credit defaults among French firms, we investigate whether and how trade credit is used to relax financial constraints. We show that firms that face idiosyncratic liquidity shocks are more likely to default on trade credit, especially when the shocks are unexpected, firms have little liquidity, are likely to be credit constrained or are close to their debt capacity. We estimate that credit constrained firms pass more than one fourth of the liquidity shocks they face on to their suppliers down the trade credit chain. The evidence is consistent with the idea that firms provide liquidity insurance to each other and that this mechanism is able to alleviate the consequences of credit constraints. In addition, we show that the chain of defaults stops when it reaches firms that are large, liquid, and have access to financial markets. This suggests that liquidity is allocated from large firms with access to outside finance to small, credit constrained firms through trade credit chains.en_US
dc.language.isoengen_US
dc.publisheren_US
dc.relation.ispartofseriesWorking paper series / Johann-Wolfgang-Goethe-Universität Frankfurt am Main, Fachbereich Wirtschaftswissenschaften : Finance & Accounting 179en_US
dc.subject.jelD92en_US
dc.subject.jelG30en_US
dc.subject.jelG20en_US
dc.subject.ddc330en_US
dc.subject.keywordinter-firm liquidity provisionen_US
dc.subject.keywordtrade crediten_US
dc.subject.keywordcredit constraintsen_US
dc.subject.keywordcredit chainsen_US
dc.subject.stwLieferantenkredit , Kreditversicherung , Verschuldungsrestriktion , Betriebliche Liquiditäten_US
dc.titleTrade Credit Defaults and Liquidity Provision by Firmsen_US
dc.typeWorking Paperen_US
dc.identifier.ppn534417531en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
Appears in Collections:Working Paper Series: Finance and Accounting, Universität Frankfurt a. M.

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