What You Sell Is What You Lend? Explaining Trade Credit Contracts

Mariassunta Giannetti, Mike Burkart and Tore Ellingsen

The Review of Financial Studies, 2011, vol. 24, issue 4, 1261-1298

Abstract: We relate trade credit to product characteristics and aspects of bank--firm relationships and document three main empirical regularities. First, the use of trade credit is associated with the nature of the transacted good. In particular, suppliers of differentiated products and services have larger accounts receivable than suppliers of standardized goods and firms buying more services receive cheaper trade credit for longer periods. Second, firms receiving trade credit secure financing from relatively uninformed banks. Third, a majority of the firms in our sample appear to receive trade credit at low cost. Additionally, firms that are more creditworthy and have some buyer market power receive larger early payment discounts. The Author 2008. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org., Oxford University Press.

Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (317)

Downloads: (external link)
http://hdl.handle.net/10.1093/rfs/hhn096 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: What you sell is what you lend? Explaining trade credit contracts (2011)
Working Paper: What You Sell is What You Lend? Explaining Trade Credit Contracts (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:rfinst:v:24:y::i:4:p:1261-1298

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Review of Financial Studies is currently edited by Itay Goldstein

More articles in The Review of Financial Studies from Society for Financial Studies Oxford University Press, Journals Department, 2001 Evans Road, Cary, NC 27513 USA.. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().