Is trade credit more expensive than bank loans? Evidence from Italian firm-level data

Heterogeneity and monetary policy from Universita di Modena e Reggio Emilia, Dipartimento di Economia Politica

Abstract: The study, aimed at evaluating the likely effects of the EC Directive on late payments, provides direct evidence that interfirm credit received by Italian manufacturing firms is, if ever, only slightly more expensive than bank loans. An econometric exercise shows that financial determinants have a stronger impact on recorded credit and debt periods for larger firms, able to use trade credit to smooth their cycle; smaller firms seem to adapt more passively to counterparties' supply and demand. A novel finding is that shorter credit periods are associated to the directly measured discount offered for quicker payments.

Keywords: Trade credit; Late payments; Credit rationing (search for similar items in EconPapers)
JEL-codes: E52 G32 (search for similar items in EconPapers)
Date: 2001-03
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