 The effect of trade credit on firm performance: Evidence from Korean firms during the Global Financial CrisisYe Jin Heo Journal of International Money and Finance, 2024, vol. 140, issue C Abstract: This paper empirically investigates the effects of two primary types of debt financing − bank credit and trade credit − on firm sales performance during the Global Financial Crisis using Korean firm-level data. I find that firms who relied more on bank credit tended to have slower sales growth, whereas those relied more on trade credit performed better during the crisis and afterwards. However, the mitigating effect of trade credit did not exist for exporters. Also, there was evidence of heterogeneous effect of trade credit among non-exporters, depending on firms' degree of financial access; the effect of trade credit during the crisis significantly diminished for firms with better financial access. The findings overall indicate that for domestic firms with limited financial access trade credit was a more stable type of financing than bank credit, limiting the deteriorating effect of financing on firm performance. Keywords: Financial crisis; Bank credit; Trade credit; Financial access (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:140:y:2024:i:c:s0261560623001882 DOI: 10.1016/j.jimonfin.2023.102987 Access Statistics for this article Journal of International Money and Finance is currently edited by J. R. Lothian More articles in Journal of International Money and Finance from Elsevier |
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