Bank Credit and Trade Credit: The Case of Portuguese SMEs from 2010 to 2019

António Pedro Soares Pinto, Carla Manuela Ribeiro Henriques, Carolina Esteves Oliveira da Silva Cardoso and Maria Elisabete Duarte Neves ()
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António Pedro Soares Pinto: School of Technology and Management of Viseu, Polytechnic Institute of Viseu, 3500-510 Viseu, Portugal
Carla Manuela Ribeiro Henriques: School of Technology and Management of Viseu, Polytechnic Institute of Viseu, 3500-510 Viseu, Portugal
Carolina Esteves Oliveira da Silva Cardoso: School of Technology and Management of Viseu, Polytechnic Institute of Viseu, 3500-510 Viseu, Portugal
Maria Elisabete Duarte Neves: Coimbra Business School|ISCAC, Polytechnic of Coimbra, 3045-601 Coimbra, Portugal

JRFM, 2023, vol. 16, issue 3, 1-19

Abstract: Small companies face significant difficulties in accessing finance, and the use of bank credit and trade credit are the primary sources of financing, specifically in small countries, with little market liquidity, and focused on the banking system, as is the case of Portugal. The main objective of this article is to identify significant drivers of bank and trade credit, as well as investigate the complementary or substitutive relationship between them, considering that both constitute an essential source of financing for small and medium-sized enterprises (SMEs). The sample comprises 5860 companies, and the analysis was performed using panel data methodology (2010–2019). The results suggest that, during the period in which the financial crisis was most felt in the country (2010–2013), companies intensified their demand for trade credit, and in the following years for bank credit. Our evidence does support the substitution hypothesis between trade and bank credit.

Keywords: SMEs; bank credit; trade credit; financial crisis; credit constraints (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2023
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