Bank loan availability and trade credit for small businesses during the financial crisis

Daisuke Tsuruta

The Quarterly Review of Economics and Finance, 2015, vol. 55, issue C, 40-52

Abstract: Using small business data, we investigate the relationship between bank loan availability and trade credit in Japan during the recent global financial crisis. Previous studies argue that the relationship between trade payables and bank loan availability is negative because trade credit is an inferior financial resource for firms. In addition, firms with better credit availability offer more trade credit to their customers. Specifying the credit guarantee program for small businesses introduced in Japan after October 2008 as an exogenous shock that enhanced credit availability, we find that small businesses increase trade credit (both payables and receivables) if bank loan availability improves. This implies that the relationship between trade payables and bank loans for small businesses is complementary. Furthermore, small businesses with enhanced credit availability offer more trade credit to their customers.

Keywords: Trade credit; Bank credit; Financial crisis; Small business (search for similar items in EconPapers)
JEL-codes: G21 G23 G33 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:55:y:2015:i:c:p:40-52

DOI: 10.1016/j.qref.2014.09.004

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