Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/189954
Authors: 
Amberg, Niklas
Jacobson, Tor
von Schedvin, Erik
Year of Publication: 
2018
Series/Report no.: 
Sveriges Riksbank Working Paper Series 354
Abstract: 
We empirically investigate the proposition that firms charge premia on cash prices in transactions involving trade credit. Using a comprehensive Swedish panel dataset on product-level transaction prices and firm-characteristics, we relate trade credit issuance to price setting. In a recession characterized by tightened credit conditions, we find that prices increase significantly more on products sold by firms issuing more trade credit, reflecting their larger exposures to increased funding costs and counterparty risks. Our results thus demonstrate the importance of trade credit for price setting and show that trade credit issuance induces a channel through which financial frictions affect prices.
Subjects: 
Trade credit
prices
inflation
liquidity
counterparty risk
JEL: 
E31
E32
D22
G30
L11
Document Type: 
Working Paper
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