Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70572
Authors: 
Carbó-Valverde, Santiago
Rodríguez-Fernández, Francisco
Udell, Gregory F.
Year of Publication: 
2008
Series/Report no.: 
Working Paper, Federal Reserve Bank of Chicago 2008-04
Abstract: 
SME investment opportunities depend on the level of financing constraints that firms face. Earlier research has mainly focused on the controversial argument that cash flow-investment correlations increase with the level of these constraints. We focus on bank loans rather than cash flow. Our results show that investment is sensitive to bank loans for unconstrained firms but not for constrained firms, and trade credit predicts investment, but only for constrained firms. We also find that unconstrained firms use bank loans to finance trade credit provided to other firms. Our results illustrate alternative mechanisms that firms employ both as borrowers and lenders (100 words).
Subjects: 
SMEs
financing constraints
bank lending
trade credit
predictability
JEL: 
G21
D21
L26
Document Type: 
Working Paper

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