Does trade credit substitute for bank credit?

Guido de Blasio

No 498, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: 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.

Keywords: trade credit; monetary policy; manufacturing firms (search for similar items in EconPapers)
JEL-codes: E51 E52 E65 (search for similar items in EconPapers)
Date: 2004-06
New Economics Papers: this item is included in nep-fmk, nep-int and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_498_04

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