The relationship between trade credit, bank credit and financial structure: from firm-level non-linearities to financial development heterogeneity. A study on MENA firm-level data

Jézabel Couppey-Soubeyran and Jérôme Héricourt

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: Using a database of more than 1,100 firms in the MENA region, this article looks at the determinants of demand for trade credit, particularly access to bank credit, size, age and the quality of the firm's financial structure. We show that the difficulty of gaining acces to bank credit positively influences the use of trade credit, and thus demonstrate the substitutability of bank credit and trade credit. Besides, firm's non-financial characteristics, namely age and size do not influence similarly the probability of having trade credit and the volume of trade credit raised. Additional investigations strongly support the existence of non-linearities in the relationship between trade credit and firm's financial structure and size. Finally, financial development emerges as a key feature of the demand for trade credit. Indeed, we show that most firm-level characteristics lose their influence on trade credit when financial development is high enough. With financial development, trade credit gets primarily driven by trade relationships and does not appear any more as a palliative solution when bank credit access is difficult

Keywords: Trade credit; bank credit; financial constraints; financial development (search for similar items in EconPapers)
JEL-codes: F4 G2 O16 O55 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2011-02
New Economics Papers: this item is included in nep-ban and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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http://mse.univ-paris1.fr/pub/mse/CES2011/11008.pdf (application/pdf)

Related works:
Journal Article: The Impact of Financial Development on the Relationship between Trade Credit, Bank Credit, and Firm Characteristics: A Study on Firm-Level Data from Six MENA Countries (2013)
Working Paper: The relationship between trade credit, bank credit and financial structure: from firm-level non-linearities to financial development heterogeneity. A study on MENA firm-level data (2011)
Working Paper: The relationship between trade credit, bank credit and financial structure: from firm-level non-linearities to financial development heterogeneity. A study on MENA firm-level data (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:11008

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