The Impact of Macroeconomic Uncertainty on Trade Credit for Non-Financial Firms

Christopher Baum, Mustafa Caglayan () and Neslihan Ozkan

No 566, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: In this paper we hypothesize that greater macroeconomic uncertainty would cause firms to increasingly turn to their suppliers as a source of finance, making greater use of trade credit. We test this hypothesis using a panel of non-financial firms drawn from the annual COMPUSTAT database and show that an increase in macroeconomic uncertainty leads to a narrowing of the cross-sectional distribution of firms' trade credit-to-sales ratios.

Keywords: trade credit; financing; liquidity constraints; uncertainty (search for similar items in EconPapers)
JEL-codes: E32 G32 (search for similar items in EconPapers)
Date: 2003-06-26
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (3)

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