Trade credit: why do production firms act as financial intermediaries?

Mitchell Berlin ()

Business Review, 2003, issue Q3, pages 21-28

Abstract: Trade credit remains the single largest source of short-term business credit in the United States and other nations around the world. Why do production firms act as financial intermediaries - a role usually reserved for banks? In "Trade Credit: Why Do Production Firms Act as Financial Intermediaries?" Mitchell Berlin focuses on explanations that view trade credit as a method of monitoring and enforcing loan contracts to relatively risky firms. He also examines explanations in which a firm's long-term supply relationship helps it to make better credit decisions than a bank world.

Date: 2003
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